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
