The Lacey Act, introduced in 1900 by Republican Congressman John F. Lacey of Iowa, was originally designed to stop illegal game across state borders but was then expanded, notably by President Ronald Reagan, to include illegal logging and breaking the laws of foreign governments.

It has has had enforcement missteps - four Americans were charged with importing lobster tails in plastic bags rather than cardboard boxes, which was a violation of a Honduran regulation that Honduras no longer enforced, yet they were sentenced to 8 years of imprisonment each because judges are no longer allowed common sense in sentencing, which has led to over-crowded prisons - and Gibson guitar employees had to wonder why federal troops with assault weapons invaded their factory to investigate wood they bought legally, but it has been successful for the most part and in 2008, President George W. Bush expanded it yet again, making it a requirement that any company doing business in America must show a chain of custody for all wood products.

Are you paying more for furniture? No, the American furniture industry and guitar makers used legal wood anyway, it was China that did not care where wood came from. But America is a big market and a new study by U.S. Forest Service economist Jeff Prestemon finds that Bush's 2008 Lacey Act Amendment reduced the supply of illegally harvested wood from South America and Asia available for export to the United States.

Anyone selling illegal wood in the US basically has to have their own government complicit in doing it, no one can 'turn a blind eye' to origin any more. Using monthly import data from 1989 to 2013, Prestemon used alternative statistical approaches to evaluate the effects of the 2008 amendment. 

"There has been growing distress around the world about the negative effects of illegal fiber sourcing (including logging) on forests, people, wildlife, and the rule of law in countries suspected of producing such wood in large quantities," says Prestemon. "In the U.S. and elsewhere, timber growers and wood product manufacturers have been concerned about the effects of illegal logging on their market prices and market shares, in both domestic and foreign markets. 

"Although the U.S. consumes a relatively small share of wood from countries suspected of having high rates of illegal wood production, having such material entering global markets affects U.S. producers by depressing wood prices globally. With the Lacey Act Amendment of 2008, the U.S. sought to set an example of how importing countries could help discourage illegal logging, with the hope that others would enact similar policies."

In 2010 the European Union followed the lead of Bush and enacted similar legislation that bans the import of illegally sourced fiber and other wood product importing countries are either contemplating or are now implementing similar trade measures. "It is important to understand whether such measures make a difference," he said.

The easiest way to find out if the Lacey Act Amendment reduced imports of illegally logged wood is to measure the amount of illegally logged products entering the U.S., but so far government officials are unable to physically detect illegal materials with the tools available to them.

Prestemon used other methods--statistical intervention models--some fairly simple, others quite complex, to tease out the effect of the amendment. The methods took into account many factors that might have affected U.S. imports, including the economic downturn, exchange rates, growth in China's economy, and the effects of laws and policies in suspected source countries.

Prestemon found that the prices of lumber and hardwood plywood imports into the U.S. from suspected illegal wood fiber source countries have increased and their quantities have decreased since the enactment of the 2008 Lacey Act Amendment, indicating a decrease in export supply in these countries. "These findings are evidence that the amendment has met at least some of its advocates' objectives," said Prestemon.

Prestemon cautions that though his research may have successfully quantified the effects of the amendment on U.S. imports, two other avenues need study before we can judge the amendment as a complete success in reducing illegal fiber sourcing.

"First and foremost we need to understand to what extent illegal producers have diverted their illegally sourced fiber exports away from the U.S. and toward countries that don't have such trade measures," said Prestemon. "Second, we need to look at possible substitutions within countries suspected of illegal sourcing, where producers decide to only export legal fiber but still illegally produce, diverting those products toward domestic consumers in their own markets. Both of these shifts in response to trade measures are a form of policy 'leakage,' and we need to understand them in order to design the most effective strategies to limit illegal sourcing in suspected countries."

Published in Journal of Forest Policy and Economics. Source: USDA Forest Service