WELFARE IMPLICATIONS OF TIMBERLAND OWNERSHIP CHANGES IN THE U.S. TIMBER MARKETS

• Main Authors: Mohammad Mahfuzur Rahman, Ian Alexander Munn, Changyou Sun
• Format: Article
• Language: English
• Published: International Journal of Food and Agricultural Economics 2016-07-01
• Series: International Journal of Food and Agricultural Economics
• Subjects: Market equilibrium; Price; Surplus; Tax; Welfare
• Online Access: http://www.foodandagriculturejournal.com/vol4.no3.pp33.pdf

In the last two decades, many forest product firms in the U.S. either divested their timberlands to timber investment management organizations (TIMOs) and conservation organizations or converted their corporate structures from C corporations to real estate investment trusts (REITs). All landowners sold smaller timberland tracts for nonforestry uses. Reduced timber supplies from conservation organizations and timberland loss to other nonforestry uses have consequences on producer and consumer surpluses in the U.S. timber markets. Equilibrium displacement model has been employed to evaluate the welfare changes in U.S. timber markets attributed to timberland ownership changes. Net reduction of timber supply contributed to the reduction of social surplus by $43 million in 2006. Compared to the $33 billion plus U.S. timber markets, this welfare reduction was small. Overall, this article explains the shifts of economic surpluses among producers and net surplus reduction for the society attributed to timberland ownership changes in the United States.