Forest protection and economic development by offshoring wood extraction: Bhutan's clean development path

With globalization, virtual exchanges of natural resources embodied in traded commodities redistribute geographically land use and its environmental impacts. Benefits of national forest protection may be undermined at the global-scale by leakage through international trade. We studied land use displacement associated with national policies to protect forests in Bhutan. This case study provides a simple situation: a dominant forest cover almost unaffected by agricultural expansion, a rural economy dominated by the primary sector, centralized forest conservation policies, and a dominant trading partner. We assessed the net effects at the international level of the Bhutanese forest protection policies by accounting for trade in wood products with India. Our results show that these policies have been effective in maintaining a high forest cover, but have been accompanied by an increasing displacement of forest use to India. In 1996-2011, the difference between the total volume of wood imported from India and the total volume exported from Bhutan-i.e., the net displacement-corresponds to 27 % of the total volume consumed in Bhutan. In 2011, 68 % of the total forest area required to produce the wood consumed in Bhutan was located in India. The wood imported by Bhutan was likely originating from tree plantations in the northeastern Indian states. Since Bhutan has few tree plantations and very valuable natural forests, the net international-level ecological impacts of this land use displacement is arguably positive. Most of the wood imports of Bhutan were wood charcoal for its emerging chemical industries. This case of displacement reflects functional upgrading in the value-chain rather than an externalization of consumption-based environmental costs. Through its government policies, Bhutan has managed to support its economic development while protecting its forests and leapfrogging the negative impacts on forests generally associated with the early stages of modernization.