The Economic Case for Maintaining the EU Deforestation Regulation

Written by Clément Collignon, CEO at Sustaain

Executive Summary

Maintaining EUDR provides economic stability, lowers long-term capital costs, and strengthens EU competitiveness.
Feedback from leading commodity traders shows the main challenge lies in defining compliance use cases, and progressive grievance solving mechanisms, which the EU should support through extensive regulation implementation support.
Scenario analysis demonstrates that rollback or weak enforcement would impose higher long-term costs than compliance.

Policy Recommendations & Implementation Priorities:
Stay firm on the law; double-down on support.

The European Union should maintain the EUDR timetable to preserve institutional credibility and investor confidence, while scaling up measures that support effective implementation:

Lock in stability and clarity – Confirm December 2025 enforcement for large firms and avoid late-stage revisions that erode predictability.
Fund impact-assessment research – Commission independent studies and sector-specific models quantifying the economic and environmental outcomes of EUDR, within the EU, at producing countries, and globally through changes in trade structure.
Work with sectoral organizations – Co-design practical playbooks with industry groups to define realistic workflows and verification paths.
Establish a cross-sector coordination body – Bring together industry, NGOs, Commission services, and Member States to monitor implementation, update technical guidelines, and showcase best practices.
Support exporters and small operators – Tie EUDR diplomatically to capacity building and financing instruments in origin countries to mitigate leakage, and foster EUDR implementation as a true development initiative fostering a path to sustainable growth for local communities in producing regions.
Continue structured dialogue and transparency – Publish guidance, FAQs, and benchmark indicators to maintain trust and alignment across supply chains.

I. Sectoral Readiness and Implementation Realities

The EUDR applies to seven major commodities — cattle, cocoa, coffee, palm oil, rubber, soy, and wood — covering both operators and traders placing products on the EU market. It addresses deforestation linked to roughly 32 million tCO₂e annually, about 16 % of global trade-driven deforestation.¹

The 2025 Forest 500 analysis finds that only 27 % of companies have commitments covering all relevant commodities, just 3 % show adequate implementation, and 34 % have no public commitments.² This confirms that most firms remain only partially prepared for EUDR compliance.

Reuters reporting highlights that while some companies delayed investment amid uncertainty, others—like Ivory Coast cocoa exporters—have traced 40 % of beans to origin.³ Meanwhile, leading firms such as Nestlé and Barry Callebaut publicly back the 2025 deadline, calling for more practical guidance rather than postponement.⁵

II. Economic Scenario Analysis: Stability vs Rollback

A 2025 study estimates the macro impact for Argentina under full EUDR compliance at  -0.14 % GDP,  with deforestation falling  2.45 % and GHG emissions 0.19 %.⁴ This shows that macroeconomic costs are modest compared with the systemic risks of repeal. Under rollback, higher risk premia and trade losses would outweigh short‑term compliance savings.

Comparative modeling and trade analysis outline three possible trajectories:

Baseline (EUDR enforced) – predictable compliance costs (~0.05–0.10 % of revenues), lower capital risk, and stronger resilience.
Weak enforcement – patchy application, fragmented regimes,  small increase in capital costs.
Rollback – reputational damage, trade fragmentation, stranded investment, and weakened credibility.

Maintaining EUDR secures Europe’s institutional credibility and long‑term growth while positioning EU industries as first movers in sustainable supply-chain innovation.

Conclusion

Maintaining the EUDR is not merely a regulatory exercise—it is a strategic investment in Europe’s economic and environmental stability. Firm enforcement, coupled with stronger support mechanisms, will ensure fair implementation, sustain global competitiveness, and preserve the EU’s leadership in sustainable trade.

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