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Timber Prices

Timber prices can be considered an indicator of the scarcity of timber as an input to production. If stumpage prices are increasing, then timber is becoming relatively more scarce. Conversely, falling stumpage prices indicate that timber is becoming more abundant relative to demands for its use. Prices for various wood products demonstrated a variety of trends between 1977 and 2004, the period for which we have comprehensive data, indicating an evolving story regarding the scarcity of these natural resources.

Between 1977 and the late 1980s, timber prices were flat to declining for hardwood and softwood products (fig. 4). Softwood sawtimber prices declined very slightly between 1977 and 1991 and softwood pulpwood prices were essentially flat between 1977 and 1989. Hardwood pulpwood prices likewise were flat between 1977 and 1988. (Our price series for hardwood sawtimber begins in 1992.) No indications of increasing scarcity were apparent through the late 1980s, while harvests grew at moderate rates (fig. 3).

Price patterns for these products started changing substantially between 1989 and 1992 (fig. 4). Real-dollar prices turned upward for all four products and increased through 1997 or 1998. Between 1988 and 1998, hardwood pulpwood prices increased at an average annual rate of 12 percent, softwood pulpwood at 5 percent, and softwood sawtimber at 8 percent. Hardwood sawtimber prices increased at a rate of 6 percent (over the period 1992–98). Price data, therefore, indicate increasing scarcity for all timber products over this decade.

Between 1998 and 2004, hardwood pulpwood and sawtimber prices leveled off, and softwood sawtimber prices declined, returning to 1994 levels by 2004. Softwood pulpwood prices have, however, followed a decidedly different pattern. Prices for this product fell to less than one-half of their 1998 level and in 2004 were at their lowest levels for the period examined (1977–2004).