Abstract

We explore the cost-effectiveness of economic incentives to induce changes in wood consumption in urban areas. We consider the case of Temuco and Padre Las Casas in southern Chile. Three incentives schemes are considered: subsidy to the demand of dry wood, subsidy to the supply of dry wood, and enforcement of the standard on the humidity content of wood. The results suggest that subsidies should been targeted to the production of dry wood. The impacts on the aggregate level of emissions are small. Finally, enforcing the humidity standard is more cost-effective than the evaluated subsidy programs.