Estimating timber supply elasticity of private forest landowners in the US South

Abstract

In the US South, private forest landowners own the majority of timberland; therefore, understanding the timber supply behavior of these landowners is a fundamental forest economic question. This study estimates the pine stumpage supply equations and elasticities of private landowners in TimberMart-South (TMS) regions. It uses individual landowner pine stumpage (sawtimber, pulpwood, and Chip-N-Saw [CNS]) sales data from 2010 to 2019 and employs the seemingly unrelated regression (SUR) to estimate supply elasticities. Over the study period, nominal sawtimber stumpage price has decreased, while CNS stumpage and pulpwood stumpage prices have not effectively changed. The SUR estimate results revealed that pine sawtimber (2.452) and CNS (1.675) stumpage supply were price elastic, while pine pulpwood stumpage supply was price inelastic (0.352). Furthermore, there was a significant and negative effect of sawtimber price on pulpwood and CNS volume supplied and vice-versa, however, the effect of the former was larger in magnitude. This study provides not only a nuanced understanding of landowners' supply elasticities of three principal stumpage products but also a valuable empirical basis to better understand the market outcomes and welfare changes that market participants might experience due to new policies and market shocks.