Climate change and timber in Latin America: Will the forestry sector flourish under climate change?

This paper examines the potential impact of climate change on forests and timber production in Latin America. The analysis links a Dynamic Global Vegetation Model (DGVM), which projects forest migration, forest dieback, and net primary productivity spatially as a function of future climate predictions, with a dynamic optimization model of global timber markets. A global model is used because climate change has impacts throughout the world, and it is important to capture these global interactions given the role of Latin American forests in global timber production. The resulting model projects timber investments, harvesting, and forest area in critical timber producing regions of Latin America, ranging from intensively managed forest plantations in Chile, Uruguay and Brazil, to less intensively managed tropical forests. The analysis is conducted with four climate models, two climate scenarios, one DGVM, and a single economic model. Without climate change, overall forest area is projected to decline in the region as forests continue to be converted to agricultural uses, although the area of plantations increases. Timber output increases as well, although the region modestly loses some market share in global timber markets in a couple scenarios. The land use trajectory for the region is not predicted to change significantly with climate change, however, total carbon storage does increase because forest productivity increases. Timber output also increases with climate change, but market share compared to the rest of the world is further diminished because slow-growing regions like Canada gain substantially from higher growth. There is substantial heterogeneity in the projected effects of climate change on plantation species across the region. In general, timber producers in the region are susceptible to growing competition from producers in other regions who may gain more from climate change.