Timber market recovery after a hurricane

Abstract

A single hurricane can result in timber losses totaling billions of dollars. Salvage operations can increase timber supply, and rebuilding activities can give rise to high demand for lumber products in an affected region. In this study, the impact of hurricanes on timber market equilibrium is assessed through a partial microeconomic equilibrium model, and the effectiveness of different policy options for recovery is compared through simulations. The analyses confirm the previous finding that stumpage price will recover gradually with less timber salvaged over time. Furthermore, landowners with undamaged timber will ultimately achieve positive producer surplus when the timber market is recovered, whereas loggers and sawmills gain slightly from the recovery process. Market power of industrial firms shows some moderate impact on lumber price and quantity but only a small impact on the stumpage and log markets. Expansion in the processing and harvesting services has a light impact on the overall market equilibrium. Policy efforts for accelerating reconstruction and increasing lumber product demand can be more effective for timber market recovery.