Markets, Institutions, and Forestry:

The Consequences of Timber Trade

Liberalization in Ecuador

DOUGLAS SOUTHGATEOhio State University, Columbus, USA

PABLO SALAZAR-CANELOSQuito, Ecuador

CARLOS CAMACHO-SAAQuito, Ecuador

and

RIGOBERTO STEWART *

Alajuela, Costa Rica

Summary. Ð Although barriers to international trade were removed during the 1990s, log pricesremain ine�ciently low in Ecuador. Oligopsonistic conditions, which prevailed in the forestrysector under protectionism, have not been relieved by increased competition. The problem is thatnew investment is discouraged by weak property rights, corruption, and dated legislation thathinders forest dwellersÕ participation in the market economy. Unless and until institutional reformis undertaken to stimulate investment and competition, the prospects for EcuadorÕs tropical forests,which are among the most biodiverse in the world, will continue to be bleak. Ó 2000 ElsevierScience Ltd. All rights reserved.

Key words Ð Latin America, Ecuador, tropical deforestation, sustainable forestry, public policy

1. INTRODUCTION

It is generally conceded that interfering withinternational trade in timber and wood pro-ducts often diminishes the incentives for forestconservation and timber resource development(Repetto & Gillis, 1988). In particular,economic growth strategies predicated onimport-substituting industrialization (ISI),which every Latin American nation haspursued at one time or another since the late1940s, has rendered forestry ®nancially unre-warding. For example, log export bans andrelated impediments to trade, though rational-ized occasionally on environmental grounds,have been put in place mainly to keep rawmaterials cheap for domestic wood processors.

Inevitably, these policies have had a depressingimpact on the value of standing timber, whichin turn has discouraged the development andapplication of good management practices.

World Development Vol. 28, No. 11, pp. 2005±2012, 2000Ó 2000 Elsevier Science Ltd. All rights reserved

Printed in Great Britain0305-750X/00/$ - see front matter

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* The research on which this paper is based was ®nanced

by the US Agency for International Development, under

contract number AEP-4212-1-00-6028-00 with Nathan

Associates and Louis Berger International and its

subcontractor, the Midwest Universities Consortium

for International Activities (project number 518-

0000.07). Of course, the ®ndings and opinions expressed

in the paper are not necessarily those of the aforemen-

tioned agencies and organizations. Likewise, the authors

are exclusively responsible for all errors and omissions.

Final revision accepted: 5 May 2000.

2005

In light of the damage done by ISI, freertrade ought to result in higher stumpage prices.This should, in turn, lead to an improvement inforestry incentives, provided that propertyrights in tree-covered land are secure andpolicies for containing the environmentaldamages of logging are in place. In Ecuador,which is the geographic focus of this paper,tari�s have been cut and restrictions on logexports have eased. But, domestic timberprices, which have risen somewhat, remain wellbelow e�cient levels. The reason for thepersisting gap is that the forestry sector su�ersfrom a severe lack of competition. Investmentby new ®rms is not occurring because propertyrights are weak and because corruption, whichhas been exacerbated by the recent prolifera-tion of environmental controls, is rampant.Furthermore, the Comunas Law of 1937 andother legislation make community organiza-tions, which own extensive tracts of tree-cov-ered land, unattractive as partners in jointforestry ventures. Under these circumstances,the few enterprises that established themselvesin the forestry business during the ISI periodstill face very little competition in domestictimber markets, and therefore pay little for rawmaterials. It is no accident that renewableresource mining continues to be a salientfeature of Ecuadorian forestry.

As is emphasized in this paper, e�ecting theinstitutional reforms needed to stimulate thecompetition that can in turn improve incentivesfor sustainable timber production is proving tobe a very great challenge.

2. TRADE LIBERALIZATION

Ecuador has made much progress in recentyears toward barrier-free international trade.Formerly quite high, tari�s have been cutdramatically. A 2.0% ad valorem salvaguardia isassessed on all imports and exports. There isalso a 0.5% charge on all international trans-actions that yields revenues for a ChildhoodDevelopment Fund (FODINFA). Otherwise,no tari�s apply to trade with the other twomembers of the Andean Group: Colombia andVenezuela. There are preferential rates for allgoods bought from or sold to Chile, Peru, andUruguay and for selected products shipped toor from Brazil. The average tari� on all othertrade is less than 10%. In addition, quotas,licensing requirements, and other restrictionsare much less burdensome than they used to be.

Consistent with overall policy reform,governmental interference with internationaltrade in timber and wood products has declinedsubstantially. Vestiges of the ISI regime arere¯ected in lower tari�s being charged for rawtimberÐ5.5%Ðwhile higher ratesÐ15.5% to20.5%Ðmust be paid for imports of plywoodand other ®nished products. The latter rates,however, are a small fraction of those appliedthrough the late 1980s. They are also compa-rable to US and Japanese tari�s on importedplywood.

For many years, nontari� impediments tointernational trade were a fundamental featureof Ecuadorian policy toward the forestrysector. Article 48 of the 1981 Forestry Law,for example, prohibited all log exports otherthan small shipments used in scienti®cresearch. Article 46 stipulated tight control ofcrossborder sales of semi-elaborated productsand granted wide latitude to the Minister ofAgriculture to approve or to disapproveimports and exports. But consistent withchanges taking place in other sectors of theEcuadorian economy and throughout LatinAmerica, a switch to a more liberalized regimestarted to occur 10 years ago. Especiallysigni®cant was the Export Facilitation Law of1989, which among other things was supposedto supersede Articles 46 and 48. Implicitly, thenew legislation removed all export limits, asidefrom those on the foreign sale of species indanger of extinction.

No part of the 1981 Forestry Law has beenformally repealed, even though there areinconsistencies with newer legislation. Appar-ently for this reason, bureaucratic acceptanceof market liberalization was grudging for anumber of years. Illustrative of the problem isan incident that occurred in June 1994, whichwas ®ve years after the Export Facilitation Lawhad been passed. The Director of the NationalForestry Institute (INEFAN) received a tele-phone call from the frustrated owner of a teakplantation. Harvesting the teak, which is notnative to Ecuador, and selling it to a foreignbuyer, as the owner wanted to do, involved nobiodiversity conservation issue of the sortwarranting state intervention. Nevertheless,one or more employees of the AgricultureMinistry (MAG) were prohibiting the transac-tion from going forward, evidently seizing onthe old Forestry Law. To break the impasse,the Director had to request the MinisterÕspersonal intervention, which occurred. Clearly,a marked discrepancy persisted between the

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general policy of free trade and actual bureau-cratic conduct (Salazar-Canelos, Southgate,Camacho, Stewart, Barreto, & Arguello, 1998).

In part to clarify that restrictions spelled outin the 1981 Law had, indeed, been overridden,INEFAN put in place new regulationsgoverning the use and management of timber inearly 1995. But as indicated later in this paper,the main consequences of this initiative hasbeen to worsen the corruption problems thathelp to deter new investment.

3. IMPACTS ON PRICES ANDPRODUCTION INCENTIVES

When and where commerce is restrictedbetween a small economy, like EcuadorÕs, andthe outside world, lack of competition is boundto be a chronic problem. In many markets,domestic demand can accommodate the outputfrom, at most, a handful of ®rms. These ®rms,needless to say, are in an excellent position toexercise monopoly power, paying less for rawmaterials and other inputs and charging morefor output.

In the past, tari�- and nontari� barriers toexports and imports directly impeded freecompetition in the Ecuadorian forestry sector,which was dominated by a small number ofindustrial enterprises. Timber prices werepegged well below international values, and theprices charged consumers for plywood andother ®nished products exceeded what theywould have paid had competitive market forcesbeen given free rein.

As one would expect, the elimination of tradebarriers has a�ected nominal protection rates(NPRs)Ðde®ned as the di�erence betweendomestic and border prices divided by borderpricesÐfor the output of Ecuadorian woodproducts ®rms. As recently as 1991, the NPRfor plywood, for example, was 70% (Southgate,Stewart, Molinos, Guerr�on, & Kernan, 1993).But because of the policy reforms described inthe preceding section, the gap between domes-tic and international prices is now largelyclosed. Using wholesale price data collected inlate 1997 from a half-dozen producers andvendors based in Quito, we have calculatedNPRs for plywood of )4 to +26%, dependingon thickness and other product features (Sala-zar-Canelos et al., 1998).

Compared to what has taken place in prod-uct markets, progress toward greater competi-tion and e�ciency in markets for raw materials

has been disappointingly modest. True, di�er-ences between domestic and e�cient priceshave started to diminish. Thirty householdheads engaged in logging in the vicinity ofBorb�on, a major timber marketing center innorthwestern Ecuador, were interviewed inOctober and November of 1997. These indi-viduals reported that average commercialvalues of industrial-grade logs had increasedduring the preceding months, from $30 to $47per cubic meter. The more recent value,however, compares poorly with what would beobserved if the countryÕs markets wereperforming e�ciently. Our analysis suggeststhat, given current values of timber in interna-tional markets and transportation expensesbetween ports on the Ecuadorian coast andBorb�on, logs should be bought in that town forapproximately $136 per cubic meter, which isnearly three times the current price. In otherwords, the NPR is approximately )65%.Negative nominal protection for sawnwood iscomparable, between )54 and )76%. Boardsmade from chanul and other tropical hardwoodschange hands for about $80 per cubic meter indomestic marketing centers. With dueaccounting for internal transportation expenses,the price in those centers should be $366 to $378per cubic meter (Salazar-Canelos et al., 1998).

Depressed log prices have weakened incen-tives for forest management. The net returns ofthat activity are di�cult to ascertain since thereis no information in Ecuador about timbergrowth under di�erent forest managementregimes. Assuming, conservatively, that annualgrowth averages one cubic meter per hectare,one can estimate net returns for two extractionregimes. One, which is not capital-intensive, isemployed by the 30 surveyed households, whoall happen to be located close to navigablerivers ¯owing toward Borb�on or some othermarketing center. The other, which is mecha-nized, must be used where ¯oating logs tomarket is not an option. As indicated in Table 1,net returns are negativeÐor perhaps slightlypositive in a few sites very close to markets andwater transportation routesÐat the pricesbeing paid for logs in late 1997. Timbermanagement in a non-riparian setting is evenless remunerative, net losses of nearly $35 perhectare occurring when output is sold for $47per cubic meter.

Among the possible impacts of higher priceswould be the improvement of managementpractices, which would raise yields andhence revenues, although no scienti®c basis for

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estimating this impact currently exists inEcuador. Accordingly, our analysis of theconsequences of increased log prices rests onthe conservative premise that yields will not riseabove current levels, which are quite low. Thisanalysis suggests that higher prices couldencourage sustainable timber resource devel-opment, although such an outcome is notguaranteed.

If harvested timber changed hands for $136per cubic meter, then annual net returns closeto navigable waterways would be between$21.40 and $51.40 per hectare, depending onextraction expenses (Table 1). Even the lowerpay-o� is ®nancially attractive in a regionwhere real estate prices, which indicate theopportunity cost of land, are $300 per hectareor less. By contrast, annual net returns in lessaccessible sites, where mechanized extraction isrequired, amount to just $10 per hectare even ifharvested timber is priced e�ciently. This is anattractive pay-o� only where landÕs opportunitycost is negligible, as it happens to be in manyparts of northwestern Ecuador where excessiverainfall, thick and erodible soils, and a lack oftransportation infrastructure combine to makeagriculture entirely infeasible.

It has to be acknowledged that comparingthe average annual net returns of forestry withthe opportunity cost of land can yield amisleading picture of timber production incen-

tives. From a private loggerÕs perspective, thebest option is often to high-grade a forest,paying little attention to the sort of site damagethat slows timber regrowth, and then move toanother stand of trees. For example, Boscoloand Vincent (2000) have found that, since thepace of regeneration compares quite poorlywith real interest rates, higher stumpage valuesencourage the adoption of sustainableharvesting and management practices inpeninsular Malaysia much less e�ectively thando environmental performance bonds.Certainly, a price run-up is bound to acceleratedeforestation if it is viewed as temporary.

That said, it is di�cult to conceive ofsustainable practices ever being adopted iftimber prices remain pegged at low levels, asthey continue to be in Ecuador.

4. WHY ARE LOG PRICES TOO LOW?

When asked why they do not receive moremoney for their output, forest owners innorthwestern Ecuador routinely respond thatmarkets in places like Borb�on are monopolized.Representatives of the wood products industrytake exception, pointing out that there arecountless timber buyers in various parts of thecountry who channel wood to a large numberof small-and medium-sized ®rms making

Table 1. ForestryÕs net returns in northwestern Ecuador with current market values and with e�cient pricesa

Nonmechanized logging(riparian settings only)

Mechanized logging

Current prices Competitiveprices

Current prices Competitiveprices

Annual timberproduction(assuming 50% iswasted during andafter harvest)

0.5 m3 0.5 m3 0.5 m3 0.5 m3

Times price ´ $47/m3 ´ $136/m3 ´ $47/m3 ´ $136/m3

Annual revenuesper hectare

$23.50 $68.00 $23.50 $68.00

Less harvest andtransport costs(per cubic meterharvested fromeach hectare)

$16.60 to $36.60 $16.60 to $36.60 $58.00 $58.00

Annual netreturns per hectare(not countingINEFAN fees)

)$13.10 to $6.90 $21.40 to $51.40 )$34.50 $10.00

a Source: Surveys of loggers (small- and large-scale) and timber buyers, October and November 1997.

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furniture, doors and windows, and other goods.This is a valid point. But the persistence ofhighly negative NPRs for logs several yearsafter major reductions in trade barriers makesit di�cult to claim that timber markets are trulycompetitive. Furthermore, the plywood indus-try, which is a mainstay of the Ecuadorianwood products sector, consists of just twoenterprises, one a relatively small business andthe other an integrated conglomerate of several®rms. Since a large share of industrial-gradetimber is used for plywood production, theabsence of a third, fourth, or ®fth ®rmundoubtedly is a telling indicator of the sort ofmonopsonization that depresses the marketvalue of raw materials.

A large gap between domestic and inter-national prices ought to be a considerableinducement for other ®rms to get involved inEcuadorian forestry, at least as buyers. Thatentry is not actually occurring obliges one toanalyze why investment is being discouraged.By far, the severest impediment to investmenthas been EcuadorÕs distortion-ridden macro-economic environment, which brought thecountry to the brink of economic collapsein January 2000. But, three other reasons,all sector-speci®c, discourage potentialentrants from putting money into the timberbusiness.

(a) Corruption induced by excessive regulation

With the 1981 Forestry Law largely super-seded by the Exportation Facilitation Law of1989, the most important governmentalintervention in the Ecuadorian forestry sectorhas to do with controls on the domesticcirculation and utilization of timber. Thesecontrols, which are spelled out in INEFANResolution 16-rd, R.O./618 (dated 24 January1995), are comprehensive, extending from thefelling of trees through the processing ofwood. Full management plans are obligatoryfor parcels larger than 100 hectares that areslated for timber extraction. But to avoid thisrequirement, most loggers operate on smallerlots. For these, simple work plans are all thatare required. Once INEFAN approval hasbeen granted, fees must be paid. Since thenational currency has devalued by more than95% since early 1995, these charges have fallento nominal levels. In January 2000, whendollarization was declared at an exchange rateof 25,000 sucres to the dollar, $0.44 (11,000sucres) was collected for each cubic meter of

unprocessed tropical hardwood, $0.28 (7,000sucres) per cubic meter of other timber, $0.88(22,000 sucres) per cubic meter of sawn trop-ical hardwood, and $0.56 (14,000 sucres) percubic meter of other sawn lumber. After thefee is paid, felling proceeds and a license totransport timber (gu�õa de movilizaci�on) isissued.

As a rule, informal motosierristas and othersmall-scale loggers pay no attention toINEFAN controls. Neither do they pay fees.The situation is di�erent for formal businessesoperating at a larger scale. If they lack properpermits, their timber is con®scated and sold onthe open market. The same is true of woodproducts manufactured from illegal timber.Any private party bringing a violation to theattention of the authorities receives half thesales proceeds as a reward, with INEFANretaining the other half.

Tight controls on the circulation and utili-zation of timber could be incorporated in a``green certi®cation'' scheme for Ecuadorianforest products. But at present, the main impactof regulation is to open up multiple opportu-nities for bribery. An o�cial seeking an illicitpayment can seize on any one of a number ofreasons: shipping more timber than what oneÕsgu�õa de movilizaci�on allows, moving timberafter a gu�õa's expiration date, as well as moreserious violations. Loggers and intermediariesin the vicinity of Borb�on, for example,complain that bribes are sometimes demandedeven when there has been full compliance withall laws and regulations. Another problemarises when INEFAN employees or theirassociates present a complaint, thereby receiv-ing half the ®ne. With INEFAN and its func-tionaries acting, in e�ect, as judge and jury,there is a tendency toward overregulation andexcessive ®nancial penalties.

Like fees paid to INEFAN and the expenseassociated with preparing logging or manage-ment plans and seeking the approval of same,illegal payments detract from stumpage values.Corruption take another toll, which probablyhas much more serious consequences for timberresource development in Ecuador. It isreasonable to suppose that existing ®rmspossess the sort of knowledge and contactsneeded to keep bribe expenses to a minimum.Lacking this advantage, potential entrantssu�er more from corruption. Of course, thisasymmetry acts as a brake on the sort ofinvestment that is part and parcel of competi-tive timber markets.

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(b) Attenuated forest ownership

Another factor that discourages new invest-ment is weak property rights in tree-coveredland. There are some places in Ecuador whereno private claims on natural resources exist andwhere public sector claims are not matched bytangible e�orts on the governmentÕs part tocontrol access. In these places, people takeadvantage of each and every opportunity tocapture economic rents by mining ecosystems.This causes environmental values to be dissi-pated entirely.

Elsewhere, ownership of a sort is recognized,although it remains far from secure. In part,this results from the long delays and cumber-some procedures required for the adjudicationof formal property rights. In a statistical ana-lysis of the causes of deforestation in theEcuadorian Amazon, Southgate, Sierra andBrown (1991) show that lack of formal tenure,related to sluggish adjudication, tends toaccelerate agricultural land clearing, whichserves to strengthen informal claims on naturalresources.

That this sort of tenurial arrangementdiscourages forestry and other nonagriculturalland uses is obvious. The problem is illustratedby an episode in August 1996, when there wasan invasion of several hundred hectares innorthwestern Ecuador owned by the countryÕsleading wood products ®rm. With full govern-mental approval and encouragement, the ®rmhas been applying various measures to limitenvironmental damages and to enhance futuretimber production at the site. It is safe toassume that the participants in the invasion feltthat they could take advantage of the institu-tional ¯ux that normally accompanies a changein the national government, of the sort takingplace at the time. Incidents such as these, whichare far from rare, demonstrate that the rule oflaw is not as strong as it should be in theEcuadorian countryside (Southgate, 1998).Anyone contemplating an investment in timberproduction is bound to be aware of the implicitrisks.

The invasion of August 1996 notwithstand-ing, the frequency of such events has trailed o�since passage of the 1994 Agrarian Law, whichstrengthened property rights in rural areas.The same piece of legislation also grantedcomunas limited rights to buy and to sell realestate. This allows group-owned land to beused as loan collateral. In addition, the newlaw creates opportunities for comuna members

to acquire individual tenure in their respectiveholdings.

Thousands of rural households in variousparts of Ecuador have taken advantage of thelatter policy change. Exceptional in this regardis the northwestern part of the country, wherelittle if any privatization has occurred. It isentirely sensible to manage forests in large,uni®ed parcels, as opposed to the 50-hectareplots traditionally awarded to the bene®ciariesof land distribution initiatives. But, the Agrar-ian Law left intact old legislation having to dowith the governance of comunas, which hashindered their participation in the marketeconomy as well as their ability to developnatural resources e�ciently.

(c) The weak state of forest-owning comunas

Much of EcuadorÕs tree-covered land isunder the informal control of indigenousgroups or communities of African descendants.One di�culty facing these groups andcommunities is the lack of legalized land rights,without which participation in formal creditand real estate markets is, at best, marginal.But even if communal land rights have beenadjudicated, serious problems arise because the1937 Comunas Law requires that the localcabildos that govern group holdings hold o�cefor just 12 months. The leadership turnovermandated by this requirement exposes forestdwellers to business practices that are unfair,uncompetitive, or both. Although speci®cdocumentation is hard to come by, accusationsthat community leaders have been bribed toaccept logging agreements that stipulate lowprices and weak environmental controls arecommon in northwestern Ecuador.

Another consequence of legislation thatweakens local institutions is that forest-basedcommunities ®nd it very hard to develop and toimplement long-term plans for renewableresource development. Likewise, it rendersthose groups and communities unattractive aspartners for ®rms that otherwise might bewilling to pursue joint sustainable forestryventures. One foreign investor who tried, butfailed, to organize such a joint venture reportedin 1993 that the current cabildo in the areawhere he was working always seemed to beasking for money to pay for a ®esta here and amotorcycle there. He reasoned that the grouptaking over in a few months would makesimilar requests, as would the cabildo thatwould take o�ce one year later, and so on. The

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expenses that would be incurred during theseveral decades required for standing timber tomature are obvious (Salazar-Canelos et al.,1998).

Private investorsÕ reluctance to do businesswith local communities comprises a very seri-ous impediment to sustainable resource devel-opment in northwestern and eastern Ecuador.The former group possesses the managerialexpertise and marketing contacts required toderive full value from the resources owned bythe latter group. If joint ventures are notpursued, forest dwellers will continue to haveno alternative to selling timber in monopson-ized markets at ine�ciently low prices.

5. CONCLUSIONS

The damage done when governmentsmanipulate or suppress market forces hasbecome abundantly clear in recent years.Understandably, this has reenforced thecon®dence of those advocating economicliberalization. It is unfortunate, though, thatwould-be liberalizers sometimes neglect that,to perform well, any market must be under-girded by a functional set of enabling institu-tions. Where there is no respect for the rule oflaw, generally, and contracts and propertyrights, speci®cally, the invisible hand of thecompetitive marketplace is unable to work itsallocative wonders.

The folly of overlooking the institutionalprerequisites for a robust and e�cient marketeconomy is prominently on display in Russiaand neighboring lands. Less important in thegrand scheme of things, the Ecuadorianforestry sectorÕs disappointing response to freertrade also reveals the importance of institu-tional antecedents for capitalist development.Unless and until regulations that aggravatecorruption more than they safeguard thenatural environment are jettisoned, propertyrights in tree-covered land are made fullysecure, and legislation that limits forest dwell-ersÕ participation in the market economy ischanged, the investment needed for competi-tion and sustainable resource development willnot occur. Put another way, continued under-investment in the institutional infrastructure ofa modern, capitalist economy is bound to resultin additional deterioration of environmentalwealth.

As is the case in the former Soviet Union, theforces allied against institutional reform in the

forests of northwestern Ecuador are powerful.Too many employees of INEFAN, which wasabsorbed by the Environment Ministry in late1998, are willing and eager to seize on thecountless opportunities for graft created byheavy regulation. There is little doubt thatdomestic wood products ®rms have concludedthat the expense and bother of regulations andcorruption are more than outweighed by thegains they enjoy because these burdens keeppotential competitors at bay. Among comunas,the clamor for reform is perhaps not what itshould be, insofar as some leaders bene®t fromthe status quo. Even outside groups, includingnongovernmental organizations (NGOs)hoping to promote sustainable forestry, do notseem to be going out of their way to press forreform.

As this paperÕs analysis of land prices andforestryÕs net returns suggests, the marketforces that would be unleashed by institutionalchange will not necessarily guarantee the long-term conservation of tropical forests in Ecua-dor. Certainly, research carried out in Malaysia(Boscolo & Vincent, 2000) and other settingsdoes not indicate that, alone, higher timberprices would guarantee sustainable resourcedevelopment. The status quo in Ecuador has,however, become untenable. For good or ill,enforcement of the 1995 regulations on timberharvesting, transport, and utilization appearsto have collapsed since INEFANÕs absorptioninto the Environment Ministry and, moreimportantly, the onset of severe macroeco-nomic crisis of 1999. In order to protect itselffrom the long-term consequences of ecosystemmining, the countryÕs leading wood products®rm has established its own tree plantations(outside of natural forests).

The government appears to be interested inreform. Recognizing that the tree-coveredhabitats that remain in western Ecuadorcomprise one of the three most criticalhotspots of threatened biodiversity that Myers(1988) has identi®ed in various parts of thedeveloping world, the Environment Ministryhas proposed a thorough revamping of theinstitutions governing the forestry sector(Ministerio de Medio Ambiente, 1999). A clearthrust of the new strategy is to involve forestdwellers more directly in the sustainabledevelopment of the timber and other resourcesthat surround them.

Maybe the grounds for optimism are stron-ger than the events of recent years lead one tobelieve. Perhaps forest exhaustion, which of

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course would be detrimental for the nationaleconomy and tragic for local populations, can

be avoided in northwestern Ecuador and otherparts of the country.

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Boscolo, M., & Vincent, J. (2000). Promoting betterlogging practices in tropical forests: a simulationanalysis of alternative regulations. Land Economics,76(1), 1±14.

Ministerio de Medio Ambiente. (1999). Estrategia parael desarrollo forestal sustentable del Ecuador. Quito.

Myers, N. (1988). Threatened biotas: hotspots in tro-pical forests. Environmentalist, 8(3), 1±20.

Repetto, R., & Gillis, M. (1988). Public policies and themisuse of forest resources. Cambridge: CambridgeUniversity Press.

Salazar-Canelos, P., Southgate, D., Camacho, C., Stew-art, R., Barreto, P., & Arguello, M. (1998). Distorsi-

ones en el mercado forestal en el Ecuador. Quito: USAgency for International Development.

Southgate, D. (1998). Tropical forest conservation: aneconomic assessment of the alternatives in LatinAmerica. New York: Oxford University Press.

Southgate, D., Sierra, R., & Brown, L. (1991). Thecauses of tropical deforestation in Ecuador: astatistical analysis. World Development, 19(9),1145±1151.

Southgate, D., Stewart, R., Molinos, V., Guerr�on, F., &Kernan, B. (1993). Improving incentives for sustain-able forest management: An Ecuadorian case study.Quito: Instituto de Estrategias Agropecuarias.

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