Economic Growth Goal for Timber in the Southeast

A static, long run economic model of timber demand and supply was used to ascertain an economic growth goal for timber in the Southeast. The potential supply of timber was defined as a function of the amount of land available for growing timber, the management plan used, and the per acre yields and costs associated with that plan. The model uses existing data on timberland area by aggregating Forest Survey plots into acreage cells, each homogeneous with respect to region, type of owner, forest type, site quality, and physiographic class. Each acreage cell was assigned three management plans–plantation, natural stand, and custodial. The criterion for choosing among the mutually exclusive management plans for a given cell is the maximization of present net worth. Insertion of a long run demand equation provides the means to estimate an economic growth goal which balances the future demand and supply of forest products. Results under a doubling of demand assumption suggest that the southeastern forest can sustain an annual softwood harvest of 3.2 billion cubic feet and an annual hardwood harvest of 1.2 billion cubic feet at a real stumpage price level which is 52 percent greater than current prices. These model estimates represent an upper bound on the timber supply which would be economically feasible to grow and harvest, given the cost and yield parameters incorporated therein.

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