SpringerLink
Log in

Linkage between forest cover and trade in forest products: an empirical evidence from BRICS and EU nations

  • Original Paper
  • Published:
European Journal of Forest Research Aims and scope Submit manuscript

Abstract

The present research aims at analyzing the determinants of trade in forest products across BRICS and EU nations by using forest cover as one of the determining factors. For this purpose, a gravity model has been utilized for the country panel of BRICS and EU from 1996 to 2020. Five product categories corresponding to the forest trade (at HS-2 level) have been considered for the analysis. Further, Poisson pseudo maximum likelihood method has been used to estimate the gravity model. The study found that the forest cover of the trading nations from BRICS and EU has affected bilateral exports of primary wood products, wood pulp products, and related items significantly. The control variables included in the gravity model have resonated the results of existing literature. The study provides good policy insights on promoting trade in forest products by adopting appropriate forest conservation policies and other interventions that can help countries in increasing their respective forest covers.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Subscribe and save

Springer+ Basic
EUR 32.99 /Month
  • Get 10 units per month
  • Download Article/Chapter or Ebook
  • 1 Unit = 1 Article or 1 Chapter
  • Cancel anytime
Subscribe now

Buy Now

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

Availability of data and material

This study is based on secondary data from published sources.

Code availability

Not applicable.

Notes

  1. https://www.statista.com/statistics/238893/ten-countries-with-most-forest-area/.

  2. https://wits.worldbank.org/.

  3. Each country is specialized in the production of one good and this good is differentiated from the good produced by the other ones.

  4. Romania, one the country in EU, has been dropped from the sample because of the data paucity.

  5. For reference, see http://www.cepii.fr/CEPII/en/bdd_modele/bdd_modele.asp.

References

  • Agnosteva D, Anderson JE, Yotov Y (2014) Intra-national trade costs: measurement and aggregation (NBER Working Paper No. w19872)

  • Anderson JE (1979) A theoretical foundation for the gravity equation. Am Econ Rev 69(1):106–116

    Google Scholar 

  • Anderson JE (2011) The gravity model. Ann Rev Econ 3(1):133–160

    Article  Google Scholar 

  • Anderson JE, Van Wincoop E (2003) Gravity with gravitas: a solution to the border puzzle. Am Econ Rev 93(1):170–192

    Article  Google Scholar 

  • Anderson JE, Yotov YV (2016) Terms of trade and global efficiency effects of free trade agreements. J Int Econ 99:279–298

    Article  Google Scholar 

  • Anderson JE, Larch M, Yotov YV (2018) GEPPML: General equilibrium analysis with PPML. World Econ 41:2750–2782

    Article  Google Scholar 

  • Arora R, Singh S, Mathur SK (2015) Assessment of the proposed India–China free trade agreement: a general equilibrium approach. J Cent Cathedra Bus Econ Res J 8(2):81–108

    Article  Google Scholar 

  • Baier SL, Bergstrand JH (2007) Do free trade agreements actually increase members’ international trade? J Int Econ 71(1):72–95

    Article  Google Scholar 

  • Baier L, Bergstrand JH, Feng M (2014) Economic integration agreements and the margins of international trade. J Int Econ 93(2):339–350

    Article  Google Scholar 

  • Baier SL, Kerr A, Yotov YV (2018) Gravity, distance, and international trade. In Handbook of international trade and transportation, pp 15–78

  • Baldone S, Sdogati F, Tajoli L (2007) On some effects of international fragmentation of production on comparative advantages, trade flows and the income of countries. World Econ 30(11):1726–1769

    Article  Google Scholar 

  • Baldwin R, Taglioni D (2011) Gravity chains: estimating bilateral trade flows when parts and components trade is important. National Bureau of Economic Research Working Paper Series, No. 16672.

  • Barbier E, Burgess J, Grainger A (2010) The forest transition: towards a more comprehensive theoretical framework. Land Use Policy 27:98–107

    Article  Google Scholar 

  • Barbier EB, Delacote P, Wolfersberger J (2017) The economic analysis of the forest transition: a review. J For Econ 27:10–17

    Google Scholar 

  • Barbieri L (2009) Panel unit root tests under cross-sectional dependence: an overview. J Stat Adv Theory Appl 1(2):117–158

    Google Scholar 

  • Bergstrand JH (1990) The Heckscher-Ohlin-Samuelson model, the Linder hypothesis and the determinants of bilateral intra-industry trade. Econ J 100(403):1216–1229

    Article  Google Scholar 

  • Bergstrand J, Egger P (2010) A general equilibrium theory for estimating gravity equations of bilateral FDI, final goods trade and intermediate goods trade. In: Brakman S, Van Bergeijk P (eds) The gravity model in international trade: advances and applications. Cambridge University Press, New York

    Google Scholar 

  • Bergstrand JH (1985) The gravity equation in international trade: Some microeconomic foundations and empirical evidence. Rev Econ Stat 474–481

  • Bergstrand JH (1989) The generalized gravity equation, monopolistic competition, and the factor-proportions theory in international trade. Rev Econ Stat 143–153

  • Bhattarai M, Hammig M (2001) Institutions and the environmental Kuznets curve for deforestation: a cross-country analysis for Latin America. Africa Asia World Dev 29:995–1010

    Article  Google Scholar 

  • Bolksejo TF, Buongiorno J (2006) Short- and long-run exchange rate effects on forest product trade: evidence from panel data. J For Econ 11:205–221

    Google Scholar 

  • Bonan GB (2008) Forests and climate change: forcings, feedbacks, and the climate benefits of forests. Science

    Google Scholar 

  • Breusch T, Pagan A (1980) The Lagrange multiplier test and its application to model specification in econometrics. Rev Econ Stud 47:239–254

    Article  Google Scholar 

  • Breitung J (2001) The local power of some unit root tests for panel data. In: Nonstationary panels, panel cointegration, and dynamic panels. Emerald Group Publishing Limited, pp. 161–177

  • Brun J F, Carrère C, Guillaumont P, De Melo J (2005) Has distance died? Evidence from a panel gravity model. World Bank Econ Rev 19(1):99–120

  • Bryan G, Henshaw B (eds) (2013) How much habitat is enough?, 3rd edn. Environment and Climate Change Canada, Toronto

    Google Scholar 

  • Buongiorno J (2015) Monetary union and forest products trade–the case of the euro. J For Econ 21(4):238–249

    Google Scholar 

  • Busa JHM (2013) Deforestation beyond borders: addressing the disparity between production and consumption of global resources. Conserv Lett 6(3):192–199

  • Carrere C (2006) Revisiting the effects of regional trade agreements on trade flows with proper specification of the gravity model. Eur Econ Rev 50(2):223–247

    Article  Google Scholar 

  • Chiu YB (2012) Deforestation and the environmental Kuznets curve in develo** countries: a panel smooth transition regression approach. Can J Agric Econ 60(2):177–194

    Article  Google Scholar 

  • Choi I (2001) Unit root tests for panel data. J Int Money Financ 20:249–272

    Article  Google Scholar 

  • Choumert J, Motel PC, Dakpo HK (2013) Is the environmental Kuznets curve for deforestation a threatened theory? A meta-analysis of the literature. Ecol Econ 90:19–28

    Article  Google Scholar 

  • Deardorff AV (1998) Determinants of bilateral trade: Does gravity work in a neoclassical world? In: Frankel JA (ed) The regionalization of the world economy. University of Chicago Press, Chicago

    Google Scholar 

  • Ding G, Guo G, Wu C, Yu J (2022) China-US trade friction and welfare: the role of regional trade agreements. Econ Model 113:105877

    Article  Google Scholar 

  • Duval Y, Utoktham C (2011) Trade costs in Asia and the Pacific: Improved and sectoral estimates. UNESCAP Repository

    Google Scholar 

  • Egger PH, Lassmann A (2015) The causal impact of common native language on international trade: evidence from a spatial regression discontinuity design. Econ J 125(5):699–745

    Google Scholar 

  • Egger P, Nigai S (2015) Structural gravity with dummies only: constrained anova-type estimation of gravity models. J Int Econ 97(1):86–99

    Article  Google Scholar 

  • Fally T (2015) Structural gravity and fixed effects. J Int Econ 97:76–85

    Article  Google Scholar 

  • FAO (2020) Global Forest Resources Assessment 2020: main report. Rome. https://doi.org/10.4060/ca9825en

    Article  Google Scholar 

  • Feenstra RC (2003) Border effects and the gravity equation: consistent methods for estimation. Scott J Polit Econ 49(5):491–506

    Article  Google Scholar 

  • Foster AD, Rosenzweig MR (2003) Economic growth and the rise of forests. Q J Econ 118(2):601–637

    Article  Google Scholar 

  • Frondel M, Vance C (2010) Fixed, random, or something in between? A variant of Hausman’s specification test for panel data estimators. Econ Lett 107(3):327–329

    Article  Google Scholar 

  • Gibson L, Lee TM, Koh LP, Brook BW, Gardner TA, Barlow J, Peres CA, Bradshaw CJA, Laurance WF, Lovejoy TE, Sodhi NS (2011) Primary forests are irreplaceable for sustaining tropical biodiversity. Nature 478:378–381

    Article  CAS  PubMed  Google Scholar 

  • Gan J, McCarl BA (2007) Measuring transnational leakage of forest conservation. Ecol Econ 64(2):423–432

    Article  Google Scholar 

  • Guo R (2004) How culture influences foreign trade: evidence from the US and China. J Socio-Econ 33(6):785–812

    Article  Google Scholar 

  • Hadri H (2000) Testing for stationarity in heterogeneous panel data. Econ J 3:148–161

    Google Scholar 

  • Hänninen R, Toppinen A (1999) Long-run price effects of exchange rate changes in Finnish pulp and paper exports. Appl Econ 31:947–956

    Article  Google Scholar 

  • Im KS, Pesaran MH, Shin Y (2003) Testing for unit roots in heterogeneous panels. J Econ 115(1):53–74

    Article  Google Scholar 

  • Kabir M, Salim R, Al-Mawali N (2017) The gravity model and trade flows: recent developments in econometric modeling and empirical evidence. Econ Anal Policy 56:60–71

    Article  Google Scholar 

  • Kangas K, Niskanen A (2003) Trade in forest products between European Union and the Central and Eastern European access candidates. Policy Econ 5(3):297–304

    Google Scholar 

  • Kastner T, Erb KH, Nonhebel S (2011) International wood trade and forest change: a global analysis. Glob Environ Chang 21(3):947–956

    Article  Google Scholar 

  • Kauppi PE, Ausubel JH, Fang J, Mather AS, Sedjo RA, Waggoner PE (2006) Returning forests analyzed with the forest identity. Proc Natl Acad Sci USA 103:17574–17579

    Article  CAS  PubMed  PubMed Central  Google Scholar 

  • Koop G, Tole L (1999) Is there an environmental Kuznets curve for deforestation? J Dev Econ 58:231–244

    Article  Google Scholar 

  • Larson J, Baker J, Latta G, Ohrel S, Wade C (2018) Modeling international trade of forest products: application of PPML to a gravity model of trade. For Prod J 68(3):303–316

    PubMed  PubMed Central  Google Scholar 

  • Lau LS, Ng CF, Cheah SP, Choong CK (2019) Panel data analysis (stationarity, cointegration, and causality). In Environmental Kuznets Curve (EKC), Academic Press, pp 101–113

  • Levin A, Lin CF, Chu CSJ (2002) Unit root tests in panel data: asymptotic and finite-sample properties. J Econ 108(1):1–24

    Article  Google Scholar 

  • Li Y, Zhang D (2008) A gravity model analysis of China’s pulp and paper products trade. TAPPI J 91(9):28–32

  • Liu A, Lu C, Wang Z (2021) Does cultural distance hinder exports? A comparative study of China and the United States. Econ Model 105:105668

    Article  Google Scholar 

  • Lundmark R (2010) European trade in forest products and fuels. J For Econ 16(3):235–251

    Google Scholar 

  • Maddala GS, Wu S (1999) A comparative study of unit root tests with panel data and a new simple test. Oxford Bull Econ Stat 61:631–652

    Article  Google Scholar 

  • Marquez J, Schindler J (2007) Exchange-rate effects on China’s trade. Rev Int Econ 15(5):837–853

    Article  Google Scholar 

  • Mather AS (1992) The forest transition. Area 24:367–379

    Google Scholar 

  • Mathur SK, Arora R, Singh S, Roy A (2017) Developments in international trade theory and gravity modelling. In: Mathur SK, Arora R, Singh S (eds) Theorizing international trade. An Indian perspective. Palgrave Macmillan, Basingstoke

    Chapter  Google Scholar 

  • Mayer T, Zignago S (2011) Notes on CEPII’s distances measures: the GeoDist Database. CEPII Working Paper 2011-25

  • McCallum J (1995) National borders matter: Canada-US regional trade patterns. Am Econ Rev 85(3):615–623

    Google Scholar 

  • Melitz J (2008) Language and foreign trade. Eur Econ Rev 52(4):667–699

    Article  Google Scholar 

  • Mitchell MG, Bennett EM, Gonzalez A (2014) Forest fragments modulate the provision of multiple ecosystem services. J Appl Ecol 51(4):909–918

    Article  Google Scholar 

  • Morland C, Schier F, Weimar H (2020) The structural gravity model and its implications on global forest product trade. Forests 11(2):178. https://doi.org/10.3390/f11020178

    Article  Google Scholar 

  • Natale F, Borrello A, Motova A (2015) Analysis of the determinants of international seafood trade using a gravity model. Mar Policy 60:98–106

  • Nasrullah M, Chang L, Khan K, Rizwanullah M, Zulfiqar F, Ishfaq M (2020) Determinants of forest product group trade by gravity model approach: a case study of China. Forest Policy Econ 113:102117. https://doi.org/10.1016/j.forpol.2020.102117

    Article  Google Scholar 

  • Nie F, Li J, Bi X, Li G (2022) Agricultural trade liberalization and domestic fertilizer use: evidence from China-ASEAN free trade agreement. Ecol Econ 195:107341

    Article  Google Scholar 

  • Oberhofer H, Pfaffermayr M (2021) Estimating the trade and welfare effects of Brexit: a panel data structural gravity model. Can J Econ/revue Can D’économique 54(1):338–375

    Article  Google Scholar 

  • Prestemon JP, Buongiorno J, Wear DN, Siry JP (2003) Chapter 11 international trade in forest products. In: Sills EO, Abt KL (Eds.) Forests in a Market Economy, pp 177–199

  • Papke LE, Wooldridge JM (2008) Panel data methods for fractional response variables with an application to test pass rates. J Econom 145(1–2):121–133

  • Raballand G (2003) Determinants of the negative impact of being landlocked on trade: an empirical investigation through the Central Asian case. Comp Econ Stud 45:520–536

  • Raghavan R, Shrimali G (2015) Forest cover increase in India: the role of policy and markets. Forest Policy Econ 61:70–76

    Article  Google Scholar 

  • Rudel TK, Coomes OT, Moran E, Achard F, Angelsen A, Xu J, Lambin E (2005) Forest transitions: towards a global understanding of land use change. Glob Environ Chang 15(1):23–31

    Article  Google Scholar 

  • Santos Silva JMC, Tenreyro S (2022) The log of gravity at 15. Port Econ J 58:1–15

    Google Scholar 

  • Silva JS, Tenreyro S (2006) The log of gravity. Rev Econ Stat 88(4):641–658

    Article  Google Scholar 

  • Spornberger J (2021) EU integration and structural gravity: a comprehensive quantification of the border effect on trade. Review of International Economics

    Google Scholar 

  • Statista (2020) The state of the world's forests-2020 10. https://www.statista.com/statistics/238893/ten-countries-with-most-forest-area/

  • Sun C, Zhang X (2018) Duration of US forest products trade. Forest Policy Econ 95:57–68

    Article  Google Scholar 

  • Tallis H, Guerry A, Daily GC (2013) Ecosystem services. In: Encyclopedia of biodiversity, 2nd Edn., pp 96–104

  • Tandetzki J, Schier F, Köthke M, Weimar H (2022) An evidence and gap map of the environmental Kuznets curve and the forest transition hypothesis for estimating forest area development. Environ Res Lett 17(12):123005

    Article  Google Scholar 

  • Tinbergen J (1962) Sha** the world economy; Suggestions for an international economic policy. Twentieth Centuary Fund

    Google Scholar 

  • Uusivuori J, Buongiorno J (1991) Pass-through of exchange rates on prices of forest products exports from United States to Europe and Japan. Forest Sci 37:931–948

    Google Scholar 

  • Van de Perre F, Willig MR, Presley SJ, Bapeamoni Andemwana F, Beeckman H, Boeckx P, Verheyen E (2018) Reconciling biodiversity and carbon stock conservation in an Afrotropical forest landscape. Sci Adv 4(3):eaar6603

    Article  PubMed  PubMed Central  Google Scholar 

  • Vicard V (2011) Determinants of successful regional trade agreements. Econ Lett 111(3):188–190

    Article  Google Scholar 

  • Vu TTH, Tian G, Zhang B, Nguyen TV (2020) Determinants of Vietnam’s wood products trade: application of the gravity model. J Sustain For 39(5):445–460

    Article  Google Scholar 

  • Wisdom HW, Granskog JE (2003) The effect of exchange rates on southern pine export. For Prod J 53:19–23

    Google Scholar 

  • Yang S, Martinez-Zarzoso I (2014) A panel data analysis of trade creation and trade diversion effects: the case of ASEAN–China free trade area. China Econ Rev 29:138–151

    Article  Google Scholar 

  • Yin Z, Wang F, Gan J (2020) Spatial spillover effects of global forest product trade. Forest Policy Econ 113:102112

    Article  Google Scholar 

  • Zhang D, Li Y (2009) Forest endowment, logging restrictions, and China’s wood products trade. China Econ Rev 20(1):46–53

    Article  Google Scholar 

  • Zhang Y, Tachibana S, Nagata S (2006) Impact of socio-economic factors on the changes in forest areas in China. Forest Policy Econ 9(1):63–76

    Article  Google Scholar 

Download references

Funding

This research did not receive any specific grant from funding agencies in the public, commercial, or not-for-profit sectors.

Author information

Authors and Affiliations

  1. Economics and Business Environment Area, Indian Institute of Management Jammu, Jammu, Jammu and Kashmir, India

    Sarbjit Singh & Jabir Ali

  2. Department of Economics and Finance, Birla Institute of Technology and Science Pilani, Pilani Campus, Pilani, Rajasthan, India

    Rahul Arora

Authors
  1. Sarbjit Singh
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Jabir Ali
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Rahul Arora
    View author publications

    You can also search for this author in PubMed Google Scholar

Contributions

SS contributed to conceptualization; data curation; formal analysis; roles/writing—original draft. RA contributed to investigation; methodology; validation; visualization; roles/writing—original draft; JA contributed to supervision; writing—review and editing. All authors reviewed the manuscript.

Corresponding author

Correspondence to Jabir Ali.

Ethics declarations

Conflict of interest

There is no conflict of interest.

Additional information

Communicated by Matthias Bösch.

Publisher's Note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Appendix

Appendix

See Table

Table 9 Descriptive statistics of major variables used Source Authors’ estimations based on logarithmic form data from 1996 to 2020 (WITS)
Full size table

9.

Rights and permissions

Springer Nature or its licensor (e.g. a society or other partner) holds exclusive rights to this article under a publishing agreement with the author(s) or other rightsholder(s); author self-archiving of the accepted manuscript version of this article is solely governed by the terms of such publishing agreement and applicable law.

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Singh, S., Ali, J. & Arora, R. Linkage between forest cover and trade in forest products: an empirical evidence from BRICS and EU nations. Eur J Forest Res 143, 19–31 (2024). https://doi.org/10.1007/s10342-023-01603-7

Download citation

  • Received:

  • Revised:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10342-023-01603-7

Keywords

JEL Classification

Search

Navigation