Green public procurement of certified wood: The impact on global welfare and welfare calculation itself

This paper investigates the impact of green public procurement (governments’ purchases) of certified wood in the EU. A spatial price equilibrium model is developed to analyse whether this policy impacts the interregional trade flows of wood and other regions’ economic welfare. The model contains an innovative feature which allows the introduction of consumers’ willingness to pay for certified wood, and producers’ willingness to accept certified wood production. The outcome of the analysis demonstrates that green public procurement of certified wood in one region can create a trade barrier for other regions and decrease their economic welfare. In the worst case scenario, the forced increase of demand for certified wood increases the prices of certified wood. This decreases the relative price of conventional wood which can trigger the production of conventional wood and endanger forest conservation. Cost reductions and adequate financial compensation for certified wood producers can tackle these problems.

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 Record created 2017-04-01, last modified 2018-01-23

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