The economic impact of the mountain pine beetle infestation in British Columbia: Provincial estimates from a CGE analysis

Abstract

The mountain pine beetle (MPB) epidemic in British Columbia (BC) peaked in 2004 and 2005, and by 2012, >53 per cent of the merchantable pine had been attacked. The annual kill has declined steadily since 2005 and is projected to continue to do so. However, given the significant amount of beetle killed wood, the timber supply is expected to fall dramatically in the coming decades. This study estimates the future provincial economic impacts of the MPB infestation in a dynamic computable general equilibrium (CGE) model, by examining the effects of the reduction in timber supply from BC forests over the 2009-2054 period. Results suggest that there will be a cumulative present value loss of $57.37 billion (or 1.34 per cent) in GDP and a $90 billion decline in welfare (compensating variation) from 2009 to 2054 in BC. These estimates emphasize the significance of negative economic impacts that may be in store for the economy in this, and potentially other provinces, and can be used to help policy-makers better understand the net benefits of adaptation options geared towards reducing the spread of such pests.