This research investigates the effects of the major economic and social forces affecting hardwood timber supply and demand in sub-regions of the Lake States of Michigan, Wisconsin, and Minnesota. Current foci are on 1) the relationship between sawlog price, labor demand, and capital investment in the Lake States hardwood sawmill industry; and 2) spatial equilibrium analysis of Lake States hardwood pulpwood markets. In the first focus area we are estimating the elasticity of demand for labor with respect to hardwood sawlog price. These estimates will determination of the likely industry impacts of decreased timber harvests due to public policy and market factors, including demand for sawmilling. In the second focus area, recent trends in supply and demand for major hardwood pulpwood species are being analyzed across sub-regions and ownerships. Specifications for hardwood pulpwood econometric models for the region are being developed using long-term time series for each state as compared to the use of short-term panel data for sub-regions of each state. Results will include the estimation of the quantitative relationship between the demand for and supply of pulpwood with regards to the respective price of the commodity and other major economic forces for each of the Lake States and the formulation a spatial equilibrium model for hardwood pulpwood in the Lake States. Results will enable estimation of optimum economic allocations, prices and sustainable level of production, consumption, and trade for each state producing important information to guide public policy and decisions.

Key Words:

hardwood pulpwood, supply & demand, spatial equilibrium analysis, Lake States, factor demand, hardwood sawmilling

Current Projects:

Sustainable forest management & employment in the Upper Great Lakes region: Input factor demand model for the saw milling industry of the Lakes States:

The objective of this study is to quantify the relationship between sawlog price and demand for labor in the hardwood sawmill industry in the Lake States. The hypothesis is that the cross-price elasticity between the two inputs of sawlogs and labor is negative. An increase in sawlog price, thus, will result in a decrease in demand for labor. If sawlogs and labor were complements in the lumber products process then restricted timber harvests would lead to higher sawlog prices and consequently reduced demand for labor.

Analysis of supply and demand of hardwood pulpwood markets in the Lakes States: Major economic forces and equilibrium modeling:

The main objective of this study is to estimate the effects of the major macro economic and social forces affecting the supply and demand for hardwood pulpwood in the Lake States of Michigan, Wisconsin, and Minnesota. To accomplish this objective, specific aims of the study are to:

Analyze recent trends in prices and quantity produced and consumed of the major hardwood pulpwood species for different forest owners (federal, state, private) across sub-regions of the Lake States;
Estimate different specifications of econometric models for Lake States hardwood pulpwood using long-term series for each state as compared with the use of short-term panel data for sub regions of each state.
Determine the main variables, affecting the demand for and supply of hardwood pulpwood (and possibly related products such as sawlogs), and the functional form of the mathematical relationship among these variables,
Establish the quantitative relationship between the demand for and supply of pulpwood with regards to the respective price of the commodity and other major economic forces for each of the Lake States; and
Formulate a spatial equilibrium model for hardwood pulpwood in the Lake States to estimate the optimum economic allocation, prices and sustainable level of production, consumption, and trade for each state;

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