Markets, government policy, and China's timber supply

Abstract

China's domestic demand and exports of wood products are rising rapidly compared to domestic supply. The determinants of timber supply in China were investigated with panel data from 25 provinces from 1999 to 2009. The results indicated that China's timber supply had responded to both market forces, reflected by timber prices largely determined by world demand and supply, and to government policies expressed by production quotas and the tenure reform on collective forestland. The price elasticity of China's timber supply was estimated at 0.31 ± 0.12. The inelastic response of production to the quota (0.20 ± 0.02) suggested that government had a limited, though significant, control of timber supply. Other things being equal, the land tenure reform increased timber supply by 18 ± 8 percent, where and when it had been implemented.