The European Union Deforestation Regulation: The Impact on Argentina

TL;DR

This study assesses the economic and environmental impacts of the EU Deforestation Regulation on Argentina, finding limited economic effects but notable environmental benefits, with potential for higher impacts due to compliance costs.

Contribution

It provides the first quantitative analysis of the EUDR's economic and environmental impacts on Argentina using a dynamic computable general equilibrium model.

Findings

GDP could decrease by 0.14% due to EUDR

Deforested land could decrease by 2.45%

GHG emissions could reduce by 0.19%

Abstract

We analyze the potential economic impacts in Argentina of the European Union Deforestation Regulation (EUDR), which as of January 2026 will prohibit the export to the European Union of certain raw materials and related products if they involve the use of deforested land. We estimate that the EUDR would cover around 6 billion US dollars in exported value, but only 2.84% is not compliant with the EUDR, with soy and cattle being the most affected production chains. We use a dynamic computable general equilibrium model to simulate the impact of the EUDR on the Argentine economy. If the non-compliant production cannot enter the EU market because of the EUDR, the results of the simulations suggest that the potential macroeconomic impacts are limited: GDP would be reduced by an average of 0.14% with respect to the baseline scenario. However, the potential environmental impact is greater. Deforested hectares would be reduced by 2.45% and GHG emissions by 0.19%. Notwithstanding, EUDR due diligence costs may still prevent compliant production from entering the EU market, so the total impacts could be higher.