Deforestation Policies and the Architecture of Trade: A Network Perspective

Julia Gonzalez

No 2025/0387, Working Papers REM from ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa

Abstract: This paper examines whether deforestation-related import regulations reshape the global trade network of forest-risk commodities such as soy, palm oil, timber, and paper. While existing research has focused on trade volumes and environmental outcomes, the structural effects of such policies on trade architecture remain underexplored. Using UN Comtrade data from 2004 to 2024 and a newly compiled dataset of import regulations, this study models global trade as a network of countries linked by bilateral flows. It applies a Difference-in-Differences framework to estimate how policy exposure affects country-level centrality, combined with community detection and modular realignment metrics to track changes in trade bloc configurations. Results show modest structural shifts. Treated importers often experience increased eigenvector centrality and reduced out-degree, especially under certification and market-based policies. However, effects are generally small and not consistently significant across all specifications. Modular realignment analysis reveals that only a few policies lead to measurable changes in trade community structure. The findings suggest that deforestation-related trade regulations can influence the architecture of global trade networks, but their structural impact depends heavily on policy design and enforcement. This paper contributes a novel network perspective to the literature on environmental trade governance.

Keywords: Deforestation; Network Analysis; Modular Realignment; Global Supply Chain. (search for similar items in EconPapers)
JEL-codes: E01 E16 (search for similar items in EconPapers)
Date: 2025-07
New Economics Papers: this item is included in nep-env, nep-inv and nep-net
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