Stumpage Prices Research Articles

Development and Application of an Algorithm to Calculate Cross-cutting Patterns to Maximize Stumpage Price based on Timber Market and Stand Conditions : A Case Study of Sugi Plantations in Gunma Prefecture, Japan

Development and Application of an Algorithm to Calculate Cross-cutting Patterns to Maximize Stumpage Price based on Timber Market and Stand Conditions : A Case Study of Sugi Plantations in Gunma Prefecture, Japan

Woody biomass availability for bioethanol conversion in Mississippi

Abstract This study evaluated woody biomass from logging residues, small-diameter trees, mill residues, and urban waste as a feedstock for cellulosic ethanol conversion in Mississippi. The focus on Mississippi was to assess in-state regional variations and provide specific information of biomass estimates for those facilities interested in locating in Mississippi. Supply and cost of four woody biomass sources were derived from Forest Inventory Analysis (FIA) information, a recent forest inventory conducted by the Mississippi Institute for Forest Inventory, and primary production costs. According to our analysis, about 4.0 million dry tons of woody biomass are available for production of up to 1.2 billion liters of ethanol each year in Mississippi. The feedstock consists of 69% logging residues, 21% small-diameter trees, 7% urban waste, and 3% mill residues. Of the total, 3.1 million dry tons (930 million liters of ethanol) can be produced for $34 dry ton−1 or less. Woody biomass from small-diameter trees is more expensive than other sources of biomass. Transportation costs accounted for the majority of total production costs. A sensitivity analysis indicates that the largest impacts in production costs of ethanol come from stumpage price of woody biomass and technological efficiency. These results provide a valuable decision support tool for resource managers and industries in identifying parameters that affect resource magnitude, type, and location of woody biomass feedstocks in Mississippi.

Native American Nonindustrial Private Forest Landowners in Southeastern Oklahoma

Abstract This study attempts to characterize the Native American forest landowners in a three-county area of southeastern Oklahoma through a mail-out landowner survey. The total forestland owned by the survey respondents totaled to 12,211 ac with a mean of 140 ac. However, 56% of the respondents own less than 80 ac. More than one-half of the Native American respondents live on or adjacent to their forestland and only 17% are absentee landowners. Almost 60% of the landowners indicated personal reasons as their primary reason for owning their forestland followed by 19% for economic uses and 17% for recreational uses. Over one-half of these landowners indicated they have harvested their forest sometime in the past. Of the 45% that have not harvested their forest in the past, 31% indicated that either stumpage prices were too low or that their trees were not mature yet. Although most Native American forest landowners are involved in managing their forestland, lack of knowledge on forest management and harvesting strategies is an impediment to more effective, active management.

Rent Capture Analysis of Ontario's Stumpage System Using an Enhanced Parity Bounds Model

We develop and use an enhanced parity bounds model (EPBM) to examine the discrepancy between the stumpage price administratively determined under Ontario’s current stumpage pricing system and the market value of stumpage covering from June, 1995 to January, 2007. The results show that in the short run, the stumpage prices were below or above the market values. However, in the long run, the underpayment and overpayment will even out each other. The results imply that Ontario’s stumpage pricing system has the ability to capture the full economic rents in the long-run, and the results also have other policy implications. <i>(JEL Q23, Q27)</i>

IMPACT OF RISK AVERSION ON THE OPTIMAL ROTATION WITH STOCHASTIC PRICE

Abstract This paper examines the effect of risk aversion on the optimal rotation when the stumpage price is stochastic. Assuming that the stumpage price is normally distributed, we show that the optimal rotation under risk aversion may be shorter than, equal to, or longer than the corresponding optimal rotation under risk neutrality. Which of these cases holds true depends on the interest rate and the real regeneration cost, and can be determined based on the marginal variance (i.e., the derivative of the variance function with respect to rotation age) evaluated at the optimal rotation under risk neutrality. Furthermore, we show that there exists a monotone continuous curve, which divides the interest rate‐regeneration cost space into two regions where risk aversion affects the optimal rotation differently. For a given interest rate, risk aversion shortens (prolongs) the optimal rotation if the regeneration cost lies below (above) the curve. Along the separating curve the optimal rotation under risk aversion coincides with the optimal rotation under risk neutrality. Two examples are presented to demonstrate the separating curve and the impacts of risk aversion on the optimal rotation.

How promptly nonindustrial private forest landowners regenerate their lands after harvest: a duration analysis

Understanding factors that influence how promptly landowners regenerate their timberlands after harvest, if at all, is critical to developing policies to improve forest productivity. Mississippi forest landowners with over 100 acres (1 acre = 0.404 ha) of forestland were surveyed in 2006 to collect harvest and regeneration data from 1996 to 2006. This study investigated the length of the time interval between harvest and reforestation. Nonparametric duration analysis was used to examine how long nonindustrial private forest landowners waited to reforest after harvesting. Parametric duration analysis was used to examine factors that influenced the length of this period. The mean time elapsed from harvest to regeneration was 11 months for landowners that regenerated their lands. The instantaneous probability of regeneration reached its highest value in the 16th month after harvest and, thereafter, decreased steadily until the 28th month, after which the probability of regeneration was essentially nil. Interest in timber production, employing a consultant, and ownerships that were predominantly pine forest types were factors associated with substantially shorter reforestation times. Lower stumpage prices and higher reforestation costs were associated with substantially longer reforestation times.

Transaction evidence analysis: stumpage prices and risk in central Georgia

This paper uses hedonic regression techniques to analyze timber bid transactions in central Georgia. Softwood stumpage prices from pay-as-cut transactions are regressed against timber sale and stand characteristics. We identify observable factors that are statistically associated with the volatility of pine sawtimber stumpage prices in the market. The remaining price volatility, defined as market risk, characterizes undiversifiable price volatility in the market. Isolating market risk in this way has implications for relative price risk across predefined timber markets. Applications of this these techniques suggest that analyzing market price variability with total measures alone, such as standard deviation, may provide false senses of timber price risk.

Redazione ed autovalidazione di una perizia di stima del valore di macchiatico

In professional arena of forestry consultancy quality standard are becoming increasingly high. The Author describes the methodology for elaborating technical report about the evaluation of stumpage price. The Author firstly presents the characteristics that this technical report must have, then he presents its framework and the various sections. For each, he explains the objective, the relevant information that must be reported, and the source of information to be use for its preparation. The last section is devoted to present the criteria that must be used for self-evaluation of the final report.

Harvesting technology and the cost of fuel chips from early thinnings

This study compared and analyzed the procurement cost of whole tree chips when using supply chains based on comminution at the roadside landing or at the terminal. It also identified the bottlenecks of the most common logging systems used in Finland. The study was done by using existing and published productivity parameters and models. The procurement cost calculations were made for a stand where the forwarding distance was 200 metres, removal of whole trees was 60 m per hectare and the area of the stand was 2.0 hectares. The average size of the removed whole trees was 30 litres. The direct transport distance from the stand to the terminal or to the end use facility was 40 km while the secondary distance from the terminal to the end use facility was 10 km. A stumpage price for the harvested raw material was not included in this study. According to the study the cost of whole trees chips were 31.9–41.6 euros/m at the plant, or 14.9–19.4 euros/MWh when the moisture content of chips was estimated to be 40%. The two-machine system was found to be the most cost competitive logging system in pre-commercial thinnings thanks to both efficient cutting and, especially, forwarding work. In the manual worker based logging, the costs of felling bunching were the same as the mechanised system, whereas in forwarding the costs were almost double. Using the harwarder system the logging costs were found to be the highest, but in the larger tree volumes and removals the costs were almost equal to the manual worker based logging. The supply chain based on chipping at the roadside landing was more cost efficient compared to the chipping at the terminal system. The lower comminution cost at the terminal was not enough to cover the higher transportation cost of unprocessed material to the terminal, handling cost of chips at the terminal or the delivery cost to the end use facility.

Old-growth boreal forests: Worth protecting for biodiversity?

This paper analyzes socially optimal forest management in terms of the rotation period and strict protection of stands when society values biodiversity benefits and harvest revenue. By using species presence and decaying wood functions, the Hartman model is extended to tackle biodiversity. A parametric version is developed to assess optimal management by using Finnish data on 32 old-growth stands. The results suggest that delayed harvesting is the optimal solution if the society values the annual flow of biodiversity benefits from these forests at or above €106 per hectare on average. If the annual value of biodiversity benefits is at or above €502 per hectare, then old-growth forest are set aside from commercial harvesting permanently. With the reference value of biodiversity, 251 €/ha/a derived from stated preference surveys, the parametric model shows that delayed harvesting is the most common option for the socially optimal management of old-growth forests, but two stands are preserved. In this case, the integrated approach maximizing both biodiversity benefits and harvest revenue results in considerably longer rotation periods than pure maximization of harvest revenue. The Hartman rotation ages and the number of permanently protected stands are, however, sensitive to the level of interest rate and stumpage prices.

Stumpage Prices in the Iranian Caspian Forests

Stumpage Prices in the Iranian Caspian Forests

Consistent estimation of long-run nonindustrial private forest owner timber supply using micro data

In this paper, the effects of stumpage prices and forest and landowner characteristics on nonindustrial private forest owners’ long-run timber supply are examined using cross-sectional variation in a data set of 1860 landowners in Finland during 1994–1998. We estimate an inverse hyperbolic sine Tobit model allowing for heteroscedasticity and non-normality of errors. The hypotheses of the rotation model can be examined by decomposing the effects of the exogenous variables into the effects on the conditional mean of nonzero harvests and the effects on the probability of nonzero harvest. The results of the study are consistent with the Faustmann rotation model when the forest owner simultaneously decides both the optimal rotation age of an even-aged stand and the optimal life-cycle consumption of goods and services with in situ valuation of standing timber.

Effects of Population Pressures on Wood Procurement and Logging Opportunities in Northern New England

Abstract The availability of raw material for harvest and use by wood-consuming mills in northern New England is a concern of the region's forest products community. Shifting populations, as well as shifting priorities for and values of land uses in the region, have placed pressures on landowners to subdivide and sell their forestland, resulting in concern about future wood supply in some areas of the region. Wood procurement managers and professional loggers, key participants in supplying raw material to wood-consuming mills, were surveyed to better understand the relationships between phenomena such as land development and the availability of logging and wood procurement opportunities. Results suggested concern about sprawl among approximately one-half of the logger respondents in the region, particularly in New Hampshire, where 60% of respondents indicated that there will be less logging in their area in 10 years because of sprawl. Three-quarters of procurement managers said that uncertainty about the future of the region's wood supply was an important or very important barrier to maintaining or expanding their businesses, and over one-half of respondents from New Hampshire indicated that too much development was a barrier. In addition, sawmills receiving at least one-half of their raw material from nonindustrial private forests were more concerned about their future wood supply than those that did not. However, stumpage prices and regulations were cited as important factors affecting mills' wood supplies more often than factors related to population pressures, such as sprawl, development, and shrinking woodlot sizes.

Management alternatives of energy wood thinning stands

Abstract Energy wood thinning has become a feasible treatment alternative of young stands in Finland. Energy wood thinnings have been carried out mainly in stands where precommercial thinning has been neglected and the harvesting conditions for industrial wood thinning are difficult. Despite of its positive effects on harvesting costs and on renewable energy potential, whole-tree harvesting has been constantly criticized for causing growth loss. In this paper, the profitability of energy wood thinning was studied in 20 Scots pine-dominated stands where energy wood thinning was carried out. The growth of the stands after thinning was predicted with the help of Motti-stand simulator. Entire rotation time of the stands was simulated with different management alternatives. The intensity of first thinning and recovery level of logging residues varied between alternatives. In order to attain acceptable harvesting conditions, industrial wood thinning had to be delayed. The effect of energy wood thinning on subsequent stem wood growth was almost the same as in conventional thinning. Whole-tree harvesting for energy proved to be profitable alternative if the stumpage price is around 3€ m −3 , the interest rate is 3% or 5% and the removal of pulpwood is less than 20 m 3 ha −1 . If the harvestable pulpwood yield is over 20 m 3 ha −1 , integrated harvesting of industrial and energy wood or delayed industrial wood harvesting becomes more profitable.

Modelling and forecasting Finnish pine sawlog stumpage prices using alternative time-series methods

This study analyzes the Nordic pine (Pinus sylvestris L.) sawlog markets in four main regions in Finland by using monthly real stumpage prices over the period January 1995 to June 2005. The special emphasis is on the short-run forecasting of different time-series models up to April 2006. As a benchmark case, we compare the models performance in terms of root mean square forecasting errors (RMSE) of standard autoregressive moving average (ARIMA) and vector autoregressive (VAR) models to those of Harvey's (1989) structural time series model (STSM), which, unlike the standard methods, decomposes the time series into unobservable components, such as deterministic and stochastic trend and seasonal and cyclical behaviour. The results indicate that, in most cases, the STSM together with Kalman filter estimation outperform ARIMA and VAR estimation. With hindsight, stumpage markets experienced a price decrease during July–December 2005 and a turning point up in early 2006 that none of these models were able to accurately predict. Based on these results, it seems to be that, in real-life forecasting situations, it is quite difficult to get precise estimates for the stumpage prices solely using the time-series approach, irrespective of how flexible the models may be with respect to structural changes.

The economic feasibility of reclaiming phosphate mined lands with short-rotation woody crops in Florida

Fast growing and short-rotation tree crops provide unique opportunities to reclaim phosphate-mined lands in central Florida. Optimum management of the eucalyptus short-rotation woody crop forestry system studied necessitates harvests every 2.5–3.6 years and replanting after 2–5 coppice harvests. The value of phosphate mined land under Eucalyptus amplifolia forestry ranges from $762 to $6507 ha −1 assuming discount rates of 10% and 4%, respectively, establishment costs of $1800 ha −1, planting costs of $1200 ha −1, planting density of 8400 tree ha −1, and a stumpage price of $20 dry Mg −1.

Selection of tree species for plantations in Japan

The selection of species used for planting is an important factor that affects how plantation forests ecologically benefit society. Sugi (Japanese cedar, Cryptomeria japonica) and hinoki (Hinoki false cypress, Chamaecyparis obtusa) are the two main plantation species in Japan. Although sugi was once the favored species in many regions, forest owners have increasingly opted to plant hinoki. We examined the effect of economic factors on the choice between these two species. We modeled the proportion of sugi planted in each prefecture in Japan using a generalized estimating equations method. The results suggest that changes in stumpage prices and forestry wages are the cause of changes in the choice of species. These findings agree with theoretical predictions derived using a Faustmann-type rotation decision model. Forest owners in Japan thus appear to choose species for planting according to current trends in economic desirability. In terms of carbon sequestration and soil conservation functions of forest, hinoki forest is considered to be somewhat inferior to sugi forest. Thus our observation implies that the Japanese forestry has shifted to the species that is desirable from the economic perspective at the expense of the ecological functions of forests.

Timber Sale Characteristics and Competition for Public Lands Stumpage: A Case Study from the Lake States

Abstract The U.S. stumpage pricing system is often presented as a market-based approach that should be adopted by Canadian provinces. We compare four public agency stumpage pricing systems in the Lake States (Michigan, Minnesota, and Wisconsin) with many similar features, but their differences lead to diverse starting points in the stumpage pricing process. Further, comparisons between the Michigan Department of Natural Resources (MiDNR) and the USDA Forest Service indicate that there is considerably more competition for MiDNR sales. This is due to institutional differences between the agencies. We estimated hedonic pricing models for Lake States national forest and MiDNR timber sales to determine which sale and institutional characteristics influenced stumpage prices. The final models for stumpage price centered on species–product composition of sales, number of species and products, regional location, administratively set sale contract length, and sale timing, competition, and firm size. Empirical results illustrate that models within the same geographic region are not readily transferable to another ownership. This will complicate efforts for cross-border comparisons of hedonic pricing results. Importantly, the models do provide insights regarding the sign and significance of variables. We conclude that the U.S. systems are not readily adaptable to Canadian regions in which little competition exists.

Market Performance of the Government-Controlled but Market-Based Stumpage System of Ontario

Abstract The market performance of the government-controlled stumpage system of Ontario is investigated by examining the relationships between the stumpage prices and the market prices of end products (lumber, composites, and pulp) produced from standing timber, using monthly data from June 1995 to Feb. 2005. The long-run equilibrium relationship between the stumpage price and the relevant market price is tested using Johansen's multivariate co-integration approach. In addition, the Granger-causality between the stumpage price and the relevant market price is also analyzed. Test results indicate that the Ontario stumpage system is working well with respect to the stumpage prices of SPF (spruce, pine, fir) for softwood lumber and pulp, while there is a need for changes and modifications in terms of revising different parameters of the system with respect to stumpage prices of SPF for composites, and stumpage prices of red pine and white pine timber for lumber. Test results are inconclusive for the stumpage price of red pine and white pine for composites.

Comparative Views of Different Stumpage Pricing Systems: Canada and the United States

Abstract Canada and the United States have many similarities, but major differences in the ownership and tenure of forestlands. These differences generate substantial differences in the way stumpage prices are determined in the two countries. These differences, including the argument that the absence of stumpages markets results in the de facto subsidization of Canadian stumpage prices, are used to justify the host of US trade restrictions on Canadian softwood lumber imports. This article examines the differences in the tenure systems. It cites the arguments commonly given in the dispute and draws out the implications of these systems on softwood resource prices. It discusses some studies, and alternative markets systems, currently under discussion to addresses the criticisms of the Canadian system and critiques one of the major proposals.