Measuring Net Investment and Productivity in Timber Production
An index number approach is developed for measuring changes in inputs, outputs, and total factor productivity in a timber-producing sector. These methods are applied to timber production in the U.S. South for the period 1952 to 1985. Results suggest that development of the sector may be described by an adjustment phase between 1952 and 1962 and a growth phase between 1962 and 1985. Aggregate output grew during the latter period at an annual rate of 2.0% for the forest industry and 1.2% for all other private lands. Input growth was also strong for the industry reflecting expansion in both the area of timberland and the intensity of management. On other private lands, however, timberland and inputs showed steady declines. Output growth net of input growth shows that productivity grew at about 0.5% per year on the industry lands and 2.5% per year on other private lands. However, the strong productivity measure for the other private ownership likely reflects measurement error related to the classification of timberland. These results demonstrate the potential hazards of using either trends in timberland area or gross investment (planting) alone to assess the development of a timber-producing sector.