Journal of Forest Economics > Vol 35 > Issue 4

Timber Price Dynamics After a Natural Disaster: A Reappraisal

Changyou Sun, Mississippi State University, USA, cs258@msstate.edu
 
Suggested Citation
Changyou Sun (2020), "Timber Price Dynamics After a Natural Disaster: A Reappraisal", Journal of Forest Economics: Vol. 35: No. 4, pp 397-420. http://dx.doi.org/10.1561/112.00000520

Publication Date: 27 Aug 2020
© 2020 C. Sun
 
Subjects
 
Keywords
JEL Codes: C62E30Q23R30
Elasticityequilibrium displacement modelhurricaneparameter uncertaintysimulation analysis
 

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In this article:
1. Introduction 
2. A Review of the Issue and Literature 
3. Methodology 
4. Data sources 
5. Results 
6. Summary and Discussion 
References 

Abstract

Natural disasters such as a hurricane can result in massive timber loss in a forested region. Timber prices in the affected region can drop sharply at the beginning and then recover gradually. In this study, the determinants of timber price recovery and the magnitudes of their contributions are analyzed through a partial equilibrium displacement model. Hurricane Hugo of 1989 is used to calibrate the model for pine sawtimber and pulpwood markets separately in South Carolina, USA. The amount of timber inventory loss and intensity of salvage harvests are found to be the leading determinants behind timber price recovery, and they can explain the recovery thoroughly if the uncertainty of model inputs is also considered simultaneously. The impact of curve rotation (i.e., the change in demand or supply elasticity across the quarters) is small and hardly separable from that of model input uncertainty. A potential trade between the damaged and surrounding regions after the hurricane can be used to explain some of the price recoveries, but the amount of trade is likely to be small, especially for pulpwood.

DOI:10.1561/112.00000520