Estimating Benefits from Whole-Tree Chipping as a Logging Innovation in Northern U.S. Forests

Two supply schedules were estimated for pulpwood production quantities and prices–with and without adoption of whole-tree chipping technology. One schedule reflects output of hardwood pulpwood (including whole-tree chips) harvested in the Northeast during 1979. The other shows what would have resulted if this pulpwood had been harvested with the mix of production methods that existed 5 years earlier (preinnovation). Comparing these supply schedules indicates the importance of whole-tree chipping in hardwood pulpwood production since 1974. On average, innovators substituting chipping technology for conventional hardwood pulpwood harvesting increased annual production by 2-1/2 times and reduced cost by $6.45 per cord-equivalent delivered as chips. Measuring the downward shift of the industry’s supply function illustrates a procedure for estimating benefits of research and subsequent technology adoption. Whole-tree chipping in 1979 created benefits equal to a 2 percent cost reduction spread across the entire hardwood pulpwood supply system.

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