The potential for a backward-bending supply curve of non-timber forest products: An empirical case study of wild American ginseng production

Abstract

Renewable natural resources that have biological constraints on reproduction and are open-access may be subjected to intense harvest activity that limits regeneration, potentially leading to a backward-bending long-run supply curve. Empirical evidence of such supply abnormalities has been found for some open-access fish species but not yet for non-timber forest products (NTFPs). We describe the theory of the backward-bending long-run supply and how such a supply relationship could produce multiple market equilibria, affecting regulatory outcomes. An empirical example is provided to test the theory in the case of wild American ginseng (Panax quinquefolius), which has been subjected to habitat loss and harvest pressure since the 18th Century and now has its exports regulated. We find evidence that quantities supplied are negatively related to price in the long run, indicating that harvest pressure is restricting wild ginseng harvestable stocks. Also, we find that a federal regulation banning exports of roots from plants under five years old, in effect since 1999, coincided with a reduction of supply. This result could be due to the slow natural rate of population recovery.

  • Citation: Frey, Gregory E.; Chamberlain, James L.; Prestemon, Jeffrey P. 2018. The potential for a backward-bending supply curve of non-timber forest products: An empirical case study of wild American ginseng production. Forest Policy and Economics. 97: 97-109. https://doi.org/10.1016/j.forpol.2018.09.011.
  • Keywords: American ginseng, International trade, Non-timber forest products, Policy, Simultaneous equations
  • Posted Date: October 3, 2018
  • Modified Date: October 23, 2018
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