An economic impact analysis of market and policy changes in a New Brunswick Fundy Model Forest community

Abstract

A two-sector computable general equilibrium model is calibrated to the New Brunswick community of Petitcodiac using translog cost function regression analysis, and a questionnaire. Simulations are conducted for marginal reductions in both the price of lumber and the timber supply. We observe that both reductions have negative impacts on output and most production factors in the forest sector. Other production sectors tend to expand as production factors flow to where they receive their highest return. Results of this study indicate that the New Brunswick community is more (less) significantly impacted from timber supply (forest price) changes than a comparative study reports for a region in Alberta.