EU Timber Regulation, A Good Idea?

Economists often question the effectiveness of environmental regulation that is forced on developing or periphery nations.  They question these types of regulation because the Kunetz curve tells us that developing countries often do not meet the average level of income required to care about the environment.  In fact, economists might say that these regulations may hinder a nations ability to reach the point on the Kunetz curve that allows them to care about their own environment.  This economic analysis comes up a little short in valuing the environment because pollution in one nation can effect the populations of many via rising ocean levels and ozone layer holes.  To account for the effect of the destruction of rain forests in developing countries the EU implemented several timber regulations today.

These regulations aim not only to protect the rain forests that we rely on to clean the air we breathe but also to protect legitimate international business.  Illegal timber trade accounts for a ten billion dollar a year loss to legitimate timber business as well as unquantifiable environmental damage according to the Financial Times.  While economists who believe in the Kunetz curve may be hesitant to implement  regulation, the EU has set out to improve the ability for developing countries to retain the wealth they produce from timber trade.  This is done by making sure the timber comes from legitimate sources.  Due to high demand for timber in the EU and not enough legitimate timber producers the market for illegal timber is in high demand.  Timber that is illegally harvested adds to corruption in developing areas and prevents legitimate businesses from forming and increasing the average level of income in the nation.

These regulations look to punish those who import illegal timber in to the EU, hopefully pushing demand for ill gotten timber down while pushing demand for legal timber up.  The EU uses its "collective muscle" to do this by regulating access to the enormous EU market which incentivizes environmental protection.   By attacking both sides of this problem the EU has attempted to appease economists by using these environmental regulations to hopefully increase developing nations ability to increase their wealth not reduce it.  The effectiveness of these measures will be interesting to see, especially if this increases the amount of legitimate timber trade in developing countries while preserving more rain forests or natural (protected) timber.