Timber sale characteristics and competition for public lands stumpage: A case study from the Lake States

Abstract

The U.S. stumpage pricing system is often presented as a market-based approach that should be adopted by Canadian provinces. We compare four public agency stumpage pricing systems in the Lake States (Michigan, Minnesota, and Wisconsin) with many similar features, but their differences lead to diverse starting points in the stumpage pricing process. Further, comparisons between the Michigan Department of Natural Resources (MiDNR) and the USDA Forest Service indicate that there is considerably more competition for MiDNR sales. This is due to institutional differences between the agencies. We estimated hedonic pricing models for Lake States national forest and MiDNR timber sales to determine which sale and institutional characteristics influenced stumpage prices. The final models for stumpage price centered on species-product composition of sales, number of species and products, regional location, administratively set sale contract length, and sale timing, competition, and firm size. Empirical results illustrate that models within the same geographic region are not readily transferable to another ownership. This will complicate efforts for cross-border comparisons of hedonic pricing results. Importantly, the models do provide insights regarding the sign and significance of variables. We conclude that the U.S. systems are not readily adaptable to Canadian regions in which little competition exists. Copyright © 2006 by the Society of American Foresters.