An Economist’s View of the Pine-Site Hardwood Problem

About 70 million acres of pine sites in the South are covered with unwanted hardwoods. Converting these sites offers the greatest potential for boosting timber production, but conversion is expensive. If products could be made from the worthless hardwoods, their sale would offset part of the clearing costs. Also, delaying conversion would no longer drastically raise clearing costs. However, giving value to the hardwoods narrows the difference in future worth of pine over hardwood and thus lowers the profitability of conversion. The net effect on profitability can be determined only for a specific site. Hardwoods removed from pine sites are not widely utilized because the South has an abundant supply of low-quality hardwoods. Hauling this bulky material great distances is expensive. Labor costs for processing inferior hardwoods are excessive. But low-quality hardwoods could compete favorably in products where better raw material does not produce a more valuable product nor yield greater amounts of product. Large landholding companies could build plants to process unwanted hardwoods from their lands, but many individual owners would still be unable to sell their hardwoods or convert to pine. Although new products would make type conversion less costly, alone they would not necessarily make it more profitable.

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