Abstract
Deforestation is a serious problem in several developing countries which are timber exporters. Export bans on logs, therefore, have been hailed by some as a welfare‐improving policy relative to free trade. This paper explores the case for an export ban on an intermediate good whose production generates environmental damage. In this two‐good model, a trade‐off emerges between achieving the environmental target and raising national welfare. When environmental damage grows rapidly with output, an export ban is likely to raise welfare. However, it is also likely to lead to higher rates of harvesting than are sustainable.