A panel data analysis of coastal log supply in British Columbia

Abstract

Log supply is a critical factor in the economic viability of the primary forest sector. The log supply of the BC Coast Forest Region was examined with monthly panel data across eight forest districts from 2003 to 2013. The results indicate that the BC coastal log supply is inelastic in the short run and long run, ranging from 0.4 to 0.8. Stumpage and diesel price are insignificant in influencing log supply, whereas wage rate is a statistically significant factor. The log supply of each forest district was further explored using panel data across species. Results indicate that the supply is inelastic in all the districts and the elasticities vary from 0.03 to 0.98. The elasticities are higher in remote districts, where the logging cost is higher and manufacturing facilities are fewer.