Redwood National Park Expansion: Impact on Old-Growth Redwood Stumpage Prices

Abstract

The 1978 expansion of the Redwood National Park involved the federal government in the taking of a significant part of the remaining merchantable inventory of old-growth redwood timber. Although Congress initially paid stumpage owners about $380 million, the adequacy of this compensation has been the subject of litigation.' One disputed point is whether anticipation of the taking resulted in a price increase for old-growth redwood stumpage, or price enhancement. The protagonists disagree about whether enhancement occurred, and if so, how much and when. The key is how anticipation changed the timber supply plans of the directly affected firms. A precise quantitative prediction of their response requires firm-specific harvest scheduling models which are not available. We argue, instead, that their planned intertemporal allocation of old-growth timber changes according to the predictions of an economic model of exhaustible resources. In