The Price-Elasticity of Stumpage Sales from Federal Forests

This paper explores the influence of the behavior of the Forest Service and Bureau of Land Management on effective public policy toward the national forests. It shows that fluctuations in stumpage sales from such forests have been large. Furthermore, those fluctuations could well have a significant impact on the price elasticity of harvest even with large stocks of uncut volume under contract. System analysis of harvest and sale patterns in nine regions during the period 1951-1992 shows that stumpage sales displayed little correlation with prices during the period; the positive price elasticity of harvest seems to have been induced largely by the behavior of logging firms. However, it finds a positive link between National Forest budgets and annual sales. If budget appropriations had been negatively correlated with stumpage prices, the price elasticity of harvest from federal forests could have been severely damped.

On Jumps and Arch Effects in Natural Resource Prices. An Application to Stumpage Prices from Pacific Northwest National Forests

Models used for natural resources prices usually preclude the possibility of large changes (jumps) resulting from discrete, unexpected events. To test for the presence of jumps and ARCH effects, we propose to use bounds and bootstrap test techniques, thus solving the unidentified nuisance parameter problem. We apply this approach to stumpage price time series from the Pacific Northwest and find evidence of jumps and ARCH effects. Using real options, we then develop a stopping model to assess the impact of neglecting jumps on the decision to harvest old-growth timber. Our numerical results show the importance of modeling jumps explicitly.Jump processes, ARCH, Bootstrap, Stumpage prices, Real options

On Jumps and ARCH Effects in Natural Resource Prices. An Application to Stumpage Prices from Pacific Northwest National Forests

Models use for natural resources prices usually preclude the possibility of large changes (jumps) resulting from discrete, unexpected events. To test for the presence of jumps and ARCH effects, we propose to use bounds and bootstrap test techniques, thus solving the unidentified nuisance parameter problem. We apply this approach to stumpage price time series from the Pacific Northwest and find evidence of jumps and ARCH effects. Using real options, we then develop a stopping model to assess the impact of neglecting jumps on the decision to harvest old-growth timber. Our numerical results show the importance of modeling jumps explicitly.Jum Processes, ARCH, Bootstrap, Stumpage Prices, Real Options

Estimation de la valeur du bois sur pied par la méthode des prix hédonistes: Application aux ventes d’automnes de l’ONF en Lorraine

A stumpage hedonic prices model is specified and estimated using ONF’s data on the 1996’s timber autumn sales in Lorraine. The analysis of stumpage price determinants allowed to propose a new model specification that improves former models. This specification uses a new functional form to take into account the tree dimension. It also introduces new variables concerning stand structure and forest management. Finally, the modeling is used to illustrate the incidence on stumpage price of some variables like the ring width average or the average volume per acre harvested.hedonic prices, stumpage, Lorraine

An Examination of the Relationships Between Hardwood Lumber and Stumpage Prices in Ohio

Understanding the relationship between hardwood lumber and stumpage prices is critical in evaluating market efficiency and in understanding the potential impact of changing technology on stump-age markets. Unfortunately, the complexity of the hardwood lumber market and lack of reliable data make it difficult to evaluate this relationship using traditional econometric systems. However, the relationship can be evaluated using economic theory, a review of market history, and statistical procedures. This paper first presents a theoretical development of the demand and supply of hardwood stumpage and then examines the history of the white oak, red oak, yellow-poplar, and hard maple markets between 1970 and 1995. Using this information, a multi-period market margin model was developed. Analysis of short-term relationships between lumber price and stumpage price revealed that these series did not always move in the same direction, but tended to move in the same direction when there were large changes in lumber prices. However, continual declines in lumber prices did not always result in continual declines in stumpage price because of apparent price expectations of the stumpage owner. In the long run, the market margin between stumpage and lumber price has declined in a discrete manner. These declines are related to periodic increases in lumber production and price that occur at the beginning of the hardwood production and price cycle. Theory stipulates that during periods of declining prices, the less efficient sawmills will be forced out of the market. Following these periods, inventories usually are insufficient to satisfy any increase in lumber demand. Therefore, when demand increases, lumber prices increase sharply causing surviving, efficient mills to increase production and to bid up stumpage prices to new, higher levels. This bidding transfers any short-term economic gains that result from increased production or marketing efficiency to the resource owners

Are Log Markets Competitive? Empirical Evidence and Implications for Canada-U.S. Trade in Softwood Lumber

Under the U.S. Department of Commerce’s ‘changed circumstances’ review, it is possible that the countervail duty on Canadian lumber can be lowered if administered stumpage prices are based on transaction evidence appraisal – on actual auction data and regression analysis. The Province of British Columbia is implementing such a market-based approach to set stumpage fees, relying on timber auction data from the Small Business Forest Enterprise Program (SBFEP) and OLS regression. We employ SBFEP data to estimate a truncated regression model, comparing our estimates of stumpage fees with the OLS results. It turns out that the OLS approach is biased and likely results in overestimates of stumpage in some timber stands and underestimates in others. Further, we demonstrate that number of bidders has an important impact on bids, but that this could create even more problems for resolving the trade dispute.Canada-U.S. softwood lumber trade, truncated regression, timber auctions, public ownership of forestland

The Economics of Spruce Budworm Outbreaks in the Lake States: An Overview

Economic effects of spruce budworm outbreaks in the Lake States were examined. The recent outbreak caused spruce and fir mortality on 420 thousand ha (I.OS million acres) of commercial forest land in the Lake States. Two models of Lake States spruce-fir markets were developed. A Static Economic Model established the nature of the Lake States spruce-fir market and a Comparative Static Model examined changes brought about by spruce budworm outbreaks. Outbreaks result in short-run supply shifts which probably decrease total revenue to stumpage owners but do not affect demand. The magnitude of long-run impacts were dependent on developing Lake States markets and forest management techniques. Further research is necessary on the value of short-run losses to stumpage owners so that the costs of forest management can be compared with outbreak losses. Long-run shifts in demand can be facilitated by attracting new industry to the area, developing new markets for the spruce-fir resource, and demonstrating that the spruce-fir resource can provide a continuous fiber source in the future. These shifts would provide the price incentives that land managers require to undertake intensive forest management. Research on the development of new markets for the spruce-fir resource is needed. As markets develop, the long-run impacts become less severe. Technology transfer programs already exist to aid land managers in developing management strategies to increase yields of spruce-fir and minimize outbreak impact

Stumpage Prices Spring 1972

This report lists the stumpage prices paid to Maine landowners during the Spring of 1972

Stumpage Prices Spring 1974

This report lists the stumpage prices paid to Maine landowners during the Spring of 1974