Economic Impacts of the Southern Pine Beetle
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This paper provides an overview of the timber economic impacts of the southern pine beetle (SPB). Although we anticipate that SPB outbreaks cause substantial economic losses to households that consume the nonmarket economic services provided by healthy forests, we have narrowly focused our attention here on changes in values to timber growers and wood-products consumers. Thus, the economic values reported here represent a lower-bound to the total economic impacts of SPB in pine-dominated forests. A theoretical framework for measuring economic impacts on individual forest landowners is described. This framework is then linked with a model of the timber market impacts of the SPB that allows us to estimate separate impacts for timber producers and wood-using firms. The salvage of timber killed by the SPB during large outbreaks creates a surge in the volume of pine timber entering the market that, in turn, decreases the timber market price faced by all timber sellers. This short-run impact decreases the economic welfare of timber producers while increasing the economic welfare of wood-using firms that can obtain timber at lower prices. Over longer periods of time, large SPB epidemics can reduce the volume of standing timber inventories, causing a smaller, but important, increase in the price of timber due to increased timber scarcity. Estimates of the short-run and long-run changes in economic welfare are computed using an empirical model. During the 28 years for which we have data, estimates of short-run impacts indicate that timber producers have lost about $1.2 billion to the SPB, or about $43 million per year, and wood-using firms have gained about $837 million or about $30 million per year due to SPB outbreaks. Because the broadscale effects of accelerated harvesting impact all timber owners in the affected areas, governments may play a role in reducing the negative impacts on timber producers. Strategies include: 1. holding SPBkilled timber on public forests off the market in order to limit the short-run price depression, 2. temporarily adjusting weight restrictions on public roads to help facilitate timber salvage on private forests, and 3. advising forest landowners with healthy forests to forego timber harvesting until the pulse of beetle-killed timber clears the market and prices return to more normal levels.