Federal timber restrictions, interregional spillovers, and the impact on US softwood markets

Abstract

An econometric model of the US softwood lumber and timber markets is estimated and used to simulate the price, trade, and welfare effects of reductions in federal timber sales in the western US commencing in the late 1980s. Results indicate that the timber sale reductions increased lumber prices by roughly 15 percent in the mid-1990s. Lumber consumers were the unambiguous losers from the policy, while lumber and timber producers were net welfare gainers as the quantity-induced losses to western lumber producers were more than offset by price increases and quantity gains to southern US and Canadian lumber producers and timber producers in all regions.