A Panel Data Analysis of Nonindustrial Private Roundwood Supply with Emphasis on the Price Elasticity

Abstract

Abstract This article presents an econometric analysis of the Norwegian nonindustrial private forest (NIPF) owners' short-term roundwood supply applying the conventional pooled Tobit model as well as the fixed effects (FE) Tobit model where unobserved individual heterogeneity are incorporated in the assumptions of the model. A panel consisting of 14,468 forest owners during the period 1989–1997 (except 1991) is used for the statistical testing. The results indicate that the current and lagged price, interest rate and various owner and property characteristics are relevant explanatory variables when evaluating factors affecting Norwegian NIPF owners' short-term roundwood supply. It is demonstrated that the econometric results differ quite substantially between the two models. Both the common interpretation of the results from pooled and FE models, the match to the theory of forest owner behavior, and the statistical measures suggest that panel data methods, like the FE model, are more suitable for short-run roundwood supply analysis than the conventional pooled model. Special attention is given to the price elasticity and its variability across regions and time. Based on the empirical results it is concluded that, among other factors, both the nature of the price data and the distribution of the price elasticity estimates are important to consider when comparing stumpage price elasticity estimates from different analysis. FOR. SCI. 49(4):530–538.