Deriving local demand for stumpage from estimates of regional supply and demand.

Abstract

The local (Forest-level or local-area) demand for stumpage can be derived from estimates of regional supply and demand. The derivation of local demand is justified when the local timber economy is similar to the regional timber economy; a simple regression of local on nonlocal prices can be used as an empirical test of similarity between local and regional economies. Three local demand relations can be derived: (a) the relation between local quantity demanded, regional stumpage price, and other variables affecting supply and demand; (b) the relation between local quantity demanded, local stumpage price, and other variables affecting supply and demand; and (c) the relation between local quantity demanded, nonlocal stumpage price, and other variables affecting supply and demand. We demonstrate how the variation in local demand can be used to evaluate the reliability of the local demand relation. Examples for four National Forests in Montana illustrate the approach.

Citation

Connaughton, Kent P.; Majerus, Gerard A.; Jackson, David H. 1989. Deriving local demand for stumpage from estimates of regional supply and demand. Res. Pap. PNW-RP-406. Portland, OR: U.S. Department of Agriculture, Forest Service, Pacific Northwest Research Station. 21 p