Table 6.29. — Indexes of trend lever hardwood stumpage prices^ in the contiguous States, 

 1952, 1962, 1970, and 1976, with projections of indexes of equilibrium prices^ to 2030 



(Index of price per thousand board feet, 

 International 1/4-inch log rule — 1967 = 100) 



Region 



1952 



1962 



1970 



1976 



Projected equilibrium prices^ 



1990 



2000 



2010 



2020 



2030 



Northeast 

 North Central 

 Southeast 

 South Central 



100.0 

 100.0 

 100.0 

 100.0 



100.0 

 100.0 

 100.0 

 100.0 



100.0 

 100.0 

 100.0 

 100.0 



100.0 

 100.0 

 100.0 

 100.0 



104.1 



99.7 



113.9 



136.3 



92.1 



93.1 



99.1 



123.6 



93.0 



97.9 



101.7 



137.3 



98.8 

 109.8 

 112.9 

 166.9 



105.1 

 123.3 

 126.4 

 203.0 



' Prices on a least squares regression line fitted to time series price data for tfie 

 years 1962-70. 

 'Prices are measured in constant (1967) dollars and are net of inflation or 



deflation. They measure price cfianges relative to tfie general price level and most 

 competing materials. 



'The prices which would result from stumpage prices rising enough to 

 maintain an equilibrium between projected timber demands and supplies. 



tions that would only be realized under the assumed 

 conditions underlying these specific projections. 



Many factors could lead to price paths different 

 from those indicated by this analysis. For example, 

 the projections of demand could vary from those 

 shown if the growth in population, economic activity, 

 and income is different from that assumed. As indi- 

 cated above, changes in the demand for some prod- 

 ucts, such as fuelwood, also could greatly alter the 

 future price outlook. 



Timber supplies could be lower, and prices higher, 

 than projected as a result of factors such as greater 

 diversion of commercial timberlands to other uses, 

 more constraints on timber management because of 

 environmental considerations, nontimber objectives 

 of forest owners, or extraordinary mortality losses. 

 Also, more intensive management than that assumed 

 could result in higher supply levels than shown by the 

 projections and result in lower stumpage and product 

 prices. 



Despite all uncertainties, it does seem reasonably 

 certain that the Nation is faced with the prospect of 

 continuing and substantial increases in relative stump- 

 age prices for most species and sizes of timber and for 

 most timber products. The increases are Ukely to be 

 largest for softwood sawtimber, the higher quality 

 hardwood timber of preferred species, and the 

 products — chiefly lumber and plywood — made 

 from this timber. This outlook is consistent with the 

 trends that have prevailed during most of the twen- 

 tieth century. It reflects growing economic scarcity of 

 a basic raw material. 



Social, Economic, and Environmental 

 Effects of Rising Timber Prices 



A growing economic scarcity of timber and the 

 associated increases in the relative prices of stumpage 



and timber products, such as those described above, 

 will have significant effects on the economy, the 

 environment, and general social well-being.'*" In 

 general, future use of timber as defined by the 

 demand-supply equilibrium analysis will be signifi- 

 cantly below what it would have been if supplies were 

 large enough to meet the base level projections of 

 demand. The use of softwood sawtimber, for ex- 

 ample, will be some 17 billion board feet less in 2030 

 than it would have been if supply was large enough to 

 meet the projected demands. 



Rising relative stumpage prices will, of course, 

 benefit many stumpage owners, although the increase 

 in returns per unit of stumpage sold may be offset in 

 substantial part by reductions in the total volume 

 sold. The timber processing industries, as distinct 

 from stumpage owners, will experience reductions in 

 future net revenues relative to what would have been 

 received if stumpage suppUes were large enough to 

 meet base level demands. Further, it is estimated that 

 rates of price increase for stumpage will be substan- 

 tially higher than the rates for lumber and plywood. 

 Thus, wood processors will be under considerable 

 pressure to invest in new equipment and adopt manu- 

 facturing processes that reduce production costs and 

 make more effective use of raw materials. Firms that 

 are unable to make this adjustment will likely face 

 serious difficulties. 



Looked at in another way, the growing economic 

 scarcity of timber will reduce markets and limit the 

 expansion potential of the timber industries, particu- 

 larly the lumber industry that is dependent on rela- 

 tively large, higher-quality sawtimber. An indicator 

 of this is the prospective effects on employment and 



*" For further amplification of the following material, see: McKil- 

 lop, William. Social, economic, and environmental effects of rising 

 timber prices. U.S. Department of Agriculture, Forest Service. (In 

 process) 



254 



