A 1 per cent rise in GDP lifts Latin American roundwood export volumes by 0.56 per cent and increases the likelihood of a trade occurring by 1.68 per cent. That is according to Nicola Caravaggio of the University of Molise and Caterina Conigliani of Roma Tre University, whose analysis of 21 Latin American exporters found that “importer countries’ economic size significantly increases both the probability and the volume of roundwood trade.”
The finding cuts against a common assumption in commodity trade: it is the wealth of the countries buying timber, not the size of the countries producing it, that determines how much Latin America exports. The study covers 1996 to 2023, spanning the height of South America’s deforestation crisis — when the region was haemorrhaging 5.2 million hectares of forest every year — through to a period when annual losses had roughly halved to 2.6 million hectares.
Larger Latin American economies are, counterintuitively, less likely to export roundwood. Domestic industries absorb supply before it clears for foreign markets, meaning economic growth at home can close off export opportunities rather than create them. Higher production volumes and larger forested areas do lift trade — but only up to the point where local demand steps in.
And whilst plantation forestry has long attracted controversy across the region, the researchers found that a higher share of planted forests is “positively associated with export volumes, suggesting scope for trade expansion without increasing pressure on natural forests.”
For Brazil, Chile, and Uruguay — where debates over plantation expansion have sharpened over the last decade — that is a significant finding. And trade agreements also affect the economy. MERCOSUR and the International Tropical Timber Agreement increase both the probability of trade and the volume that moves, whilst APEC lifts volumes without a statistically significant effect on whether trade occurs at all. Countries with stronger legal systems trade more consistently and in larger quantities than those without.
Exchange rate movements act as a practical brake on everything else the researchers identify. When exporter currencies strengthen, timber becomes more expensive for overseas buyers and shipments fall — a dynamic that has directly affected Brazilian and Chilean exporters through repeated cycles of currency appreciation.
Of all the paper’s findings, the climate result may prove the most consequential over time. “Natural disasters in importing countries increase the probability of trade,” Caravaggio and Conigliani write — damaged infrastructure creates immediate demand for timber, and affected countries source it quickly from wherever supply is available.
For more information: Caravaggio, N., & Conigliani, C. (2026). Gravity model of timber trade from Latin America. Forest Policy and Economics. https://doi.org/10.1016/j.forpol.2026.
