Promoting better logging practices in tropical forests: A simulation analysis of alternative regulations

Standard recommendations for improving logging practices in tropical forests include lengthening concession agreements, making concessions renewable, and requiring concessionaires to deposit performance bonds. In this paper we investigate the likely effectiveness of these recommendations by using a simulation model of a Malaysian rainforest. We focus on two classes of decisions faced by loggers: which logging technology to adopt and whether or not to comply with prescribed diameter cutting limits. We predict the impact of alternative regulations on these decisions and on the resulting economic and environmental outcomes. Renewability conditions and performance bonds emerge as potent instruments for improving logger behavior. (JEL Q23).