An economic analysis of the long-run timber market in East Texas

Abstract

This study was initiated to determine possible demand and supply equilibria in the East Texas timber market for the year 2000. The demand and supply schedules were developed independently, using two separate analytical methods. The resultant curves were combined to portray equilibria for the timber market as a whole. A total of eight supply curves were constructed. Of the eight, half reflected the public perspective of timber management costs while the other half represented the private view. This cost distinction was made to consider different interest rates appropriate for public and private decision makers in compounding timber revenues and management costs into the future. The procedure used to develop each supply curve involved characterizing the East Texas forest acreage by ownership, site productivity and physiographic site c lass, and then determining all forest management options currently in use. Fourteen options ranging from short rotation plantations to long rotation custodial stands were considered. Management costs associated with the various management options were identified and compounded to the end of each rotation. Yield table projections were made for all options based on existing projection procedures appropriate for the East Texas area and the tree species involved. The cubic foot yield values and the cost information were used in constructing the supply curves. These curves show the amount of timber that would be supplied at various prices given different behavioral assumptions about three landowner groups: public, forest industry and private non-industrial owners. The first set of curves reflected the public and private views of timber supply based on custodial management by all owners. The second set of curves represented timber supplies under intensive (plantation) forest management, and the third set represented the supply that would be available if current management practices were continued in the future. The final set of curves were developed under the assumption that all forest landowners act so as to maximize their net present worth...