An intervention analysis of Hurricane Hugo's effect on South Carolina's stumpage prices

Abstract

Using intervention analysis and Timber Mart-South price data, we test hypotheses concerning the impact of Hurricane Hugo on regional stumpage prices. In both the hardwood sawtimber and pine pulpwood markets, a gradual die-down price effect was detected, but a persistently higher or lower price was not found. In the hardwood pulpwood market, we could not even identify a significant price drop immediately followed the occurrence of Hugo. Only in the pine sawtimber market were we able to detect a higher price of $6.00 per thousand board feet in the long run. However, our examination of an average price series for pine sawtimber across the southern United States suggests that this effect could have come from structural shifts in the regional market, rather than from Hugo's impact. Our empirical evidence thus rejects the hypothesis of a persistently higher or lower price in favor of the alternative that Hugo caused only a gradual die-down price effect.