Are There Efficiency Gains from the Removal of Natural Resource Export Restrictions? Evidence from British Columbia

Abstract

Log export bans (LEBs) are a popular development tool utilised by developing nations with sizable endowments of timber; however, the actual impact of these policies is debatable. British Columbia has a developed forestry sector and still maintains a LEB. This trade restriction continually creates conflicts with Canada's international trade partners, including the United States. This paper examines the efficiency implications of a hypothetical removal of roundwood export restrictions in British Columbia using roundwood price and quantity data from 1995 to 2008. A time‐series econometric approach is utilised to determine supply and demand elasticities for British Columbia's roundwood. Empirical results from a vector error correction model suggest that a removal of export restrictions will generate an overall increase of approximately $347.91 million US dollars per year to British Columbia's forest economy.