It said almost half of New Zealand's total wood production was harvested from central North Island forests within 100km of Rotorua.
Forestry and wood processing accounts for approximately 15 per cent of Rotorua's GDP, with around 11 million cu m of logs harvested each year from around Rotorua - four million of which was exported in raw log form, mostly to China.
The remaining 7 million cu m of timber was processed into higher value products.
The report indicated that logs currently exported represented an opportunity for greater economic growth if more wood could be processed into local products to compete in national and international markets.
Mayor Steve Chadwick said a Wood First policy would support the council's recently adopted Rotorua 2030 vision and goals.
"It's all about our future economic growth and, given our location surrounded by forest, it's also about starting to tell the real story of Rotorua.
"This is outside-the-box thinking, and it's very exciting that we'll be the first in New Zealand to adopt a Wood First policy."
Deputy mayor Dave Donaldson said the policy would provide a real opportunity for wider collaboration across the Bay of Plenty.
District councillor Tania Tapsell described the decision as "a very exciting initiative".
"It completely makes sense, not only for our regional economy, but nationally as well."
Councillor Mark Gould said the policy would have a huge impact on Rotorua's future.
The unanimous committee decision was to develop a Wood First policy for adoption by the council and to prepare a plan for its implementation.
