IS THE LEVEL OF NATIONAL FOREST TIMBER HARVEST SENSITIVE TO PRICE

Theoretical and empirical analyses of US timber markets have traditionally treated the harvest from national forests as fixed and insensitive to price. This seems reasonable in the long term, however, the assumption of fixed supply is less appropriate in short-term analysis, eg, over quarterly or annual periods, where purchasers of national forest timber draw harvests from the inventory of sold but uncut sales. This paper explores the short-run behavior of national forest timber harvest and develops a model of harvest determination that explicitly incorporates price. The first section examines the historical evidence on fluctuations in national forest harvest and the relationship between national forest and private harvest over the business cycles of the past several decades, noting that the national forest share of harvest actually rises in periods of rising timber prices. We then develop the theoretical structure of the model and test its consistency with observed behavior using aggregate annual data on national forest harvest in four western regions. The final section notes that current policy changes which reduce the uncut volume under contract may act to increase short-run price volatility. -from Authors