Gravity model of timber trade from Latin America

This study investigates the determinants of timber trade from 21 Latin American countries to global markets over the period 1996–2023 using a gravity model framework. We focus in particular on roundwood, that is the dominant primary forest product in international trade, and we address the high prevalence of zero trade flows by estimating a Negative Binomial hurdle gravity model in a Bayesian setting, with posterior inference obtained via the Integrated Nested Laplace Approximation. Our study contributes to the literature by proposing a novel statistical methodology for gravity models and by providing insights into Latin America’s bidirectional timber trade. The results show that importer countries’ economic size significantly increases both the probability and the volume of roundwood trade, while exporter-side production capacity and forest endowments are key drivers of export intensity. Managed forestry plays an important role: a higher share of planted forests is positively associated with export volumes, suggesting scope for trade expansion without increasing pressure on natural forests. Climate-related natural disasters in importing countries increase the probability of trade, indicating growing demand for timber following extreme events. Institutional quality consistently enhances trade on both the extensive and intensive margins, while currency appreciation in exporter countries reduces competitiveness and trade flows. Finally, participation in selected trade agreements, particularly APEC, ITTA, and MERCOSUR, positively affects trade outcomes. These findings highlight the importance of sustainable forest management, institutional quality, macroeconomic stability, and context-specific trade agreements in strengthening Latin America’s position in global timber markets, while mitigating deforestation risks and increasing resilience to climate-related shocks. • First comprehensive study of Latin American roundwood trade (1996–2023). • Bayesian Negative Binomial hurdle gravity model with INLA in timber trade. • Importer demand, exporter capacity, forest endowments, and management drive intensity. • Institutions, exchange rates, disasters, and trade deals shape trade margins.