Aggregate Timber Supply: From the Forest to the Market
Timber supply modeling is a means of formalizing the production behavior of heterogeneous landowners managing a wide variety of forest types and vintages within a region. The critical challenge of timber supply modeling is constructing theoretically valid and empirically practical aggregate descriptions of harvest behavior. Understanding timber supply is essential for assessing tradeoffs between forest production and the environment, for forecasting timber market activity and timber prices, and for evaluating the level and distribution of costs and benefits of forest policies. It follows that timber supply modeling is an essential interface between forest production economics and policy and decision making. This chapter examines timber supply modeling, focusing especially on issues regarding aggregation of timber stocks (some of this chapter is based on Wear and Parks 1994). A section on general theory is followed by a discussion of various contemporary modeling approaches. The explicit aggregation of forest capital and description of capital structure in the analysis of timber supply remain as core research issues. We conclude with an empirical example that explores these topics.