Leakage Effects from Restrictions in Timber Supply: An Application to Sweden

The interest in forests from a climate and biodiversity perspective is increasing. Several scientific scenarios and political narratives suggest that reduced timber harvest may facilitate these perspectives. However, reducing timber harvest in one location might result in an increased harvest elsewhere. A harvest leakage might occur. This study estimates the magnitude of leakage due to potential reductions in timber harvests in Sweden. The leakage is calculated using an empirical estimation model based on market responses. The results indicate that 24–77 percent of the reduced harvest will be offset by an opposing change in other countries, depending on timber assortment and time horizon. Thus, the magnitude of the leakage is case specific, but, in all cases, sizeable. Subsequently, the expected climate benefits of policies may be severely reduced if the leakage is left unaddressed in the policy design.