Personally, I wouldn't. I know many people dont liek the look of functional setups but rubbermaids and kitty litter pans work great for hides. If you were set on making one out of wood I recommend using a hardwood such as oak or birch with several coats of a waterbased urethane. Plywood releases all sorts of awful things such as formaldehyde. If you DO decide to go ahead with plywood, make sure to use an exterior grade and seal it VERY VERY well with many coats of a water-based urethane. This will greatly reduce the offgassing, but still not as safe as you can get.
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