How Joint is Joint Forest Production? An Econometric Analysis of Timber Supply Conditional on Endogenous Amenity Values

Abstract

Abstract In search of ways to enhance and sustain the flow of services from forests, policy makers in the public and private sectors look to forest sector models to project future forest uses. A major shortcoming of these models is a timber supply specification that inadequately accounts for suppliers choosing the structure of their forest capital to self-produce nontimber amenities. This inadequate characterization of resource use, if significant, can impede the development of sound forest policy, particularly in settings where forest owners possess diverse preferences for forest amenities. In this article, we develop and estimate a timber supply model that is consistent with the idea of joint self-production of timber and nontimber amenities, such that timber supply is a function of an endogenous distribution of forest inventory that correlates to ownership and management characteristics. Using data for the U.S. South and three-stage least squares procedures, we confirm that timber and nontimber amenities are jointly produced by private forest owners. We also note that owner and management characteristics influence joint production decisions. We believe that the parameters estimated through such an integrated empirical exercise could critically improve forest sector forecasting models and the related forest policy analyses. FOR. SCI. 48(3):479–491.