General policy uncertainty: A crucial, yet overlooked, factor for the forest sector1

Unexpected macroeconomic effects and unanticipated administrative action, both external to the activities of the forest sector itself, create crucial uncertainty for production, growth, and development in the forest sector. They dominate as determinants of forest sector performance. Yet they are a source of uncertainty that has been entirely overlooked by forest policy decisionmakers. We explain the general effect of both variants of unanticipated and exogenous activity, then first demonstrate the macroeconomic variant with data from Argentina and the contrast with Argentina's more stable neighbors: Brazil, Chile and Uruguay. Further comparative analyses, if with less detail, for countries in seven other regions of the world show the contrasts within each region and the generality of this effect. We continue, showing the effect of the second variant, administrative action, in several South, Southeast and East Asian countries, with greater detail in examples from China. In conclusion, we summarize and then suggest why this form of uncertainty, in both of its variants, has been overlooked by those who advise on forest policy and how we, as economists and forest policy advisors ourselves, should respond. Forest policy designed without full comprehension of the impact of macroeconomic and administrative uncertainty is destined to fail.