Impact of timber-fee increases on British Columbia forest products companies: an economic and policy analysis

1998 ◽  
Vol 28 (4) ◽  
pp. 617-625 ◽  
Author(s):  
Clark S Binkley ◽  
Daowei Zhang
Keyword(s):  
British Columbia ◽  
Stock Exchange ◽  
Forest Products ◽  
Good News ◽  
Forest Sector ◽  
Average Charge ◽  
Fully Depleted ◽  
Highly Correlated ◽  
Policy Direction ◽  
The Impact

On 14 April 1994, the British Columbia government announced a new stumpage formula that, at then-expected product prices, increased the average charge by about $12/m3 and more than doubled the rate at which stumpage fees change when lumber prices change. Most of the increased revenues are reinvested in the forest sector by a new organization, Forest Renewal British Columbia (FRBC), created specifically for that purpose. Using standard event-study methodologies, this paper documents the net effect of the fee increases and new policy direction on British Columbia forest products companies. After controlling for firm-specific risk and the decline in the Toronto Stock Exchange that occurred at about the same time, the new stumpage policy extracted about $1.0 billion from shareholders of the firms studied, and perhaps $2.4 billion from all licencees (an amount roughly equal to the capitalized after-tax cost of the higher fees). The impact on individual firms is highly correlated with the allowable annual cut (AAC) in replaceable licenses each holds, with an average impact of about $33.3/m3 of AAC. The market appears to have discounted both the good news about offsets in impending timber-supply reductions that the creation of FRBC implies and the reductions in earnings risk that the new stumpage system provides. When added to the increased regulatory costs associated with the new provincial Forest Practice Code, the timber-fee increases appear to have fully depleted the value of holding British Columbia timber quotas.

International trade in forest products: lumber trade disputes, models and examples

2021 ◽  
Keyword(s):  
United States ◽  
International Trade ◽  
Forest Products ◽  
The United States ◽  
Wood Products ◽  
Forest Sector ◽  
Softwood Lumber ◽  
Background Theory ◽  
The North ◽  
The Impact

Abstract Because of the long-standing Canada-United States lumber trade dispute and the current pressure on the world's forests as a renewable energy source, much attention has been directed toward the modelling of international trade in wood products. Two types of trade models are described in this book: one is rooted in economic theory and mathematical programming, and the other consists of two econometric/statistical models--a gravity model rooted in theory and an approach known as GVAR that relies on time series analyses. The purpose of the book is to provide the background theory behind models and enable readers to easily construct their own models to analyze policy questions, whether in forestry or another sector. Examples in the book illustrate how models can be used to say something about a variety of issues, including identification of the gains and losses to various players in the North American softwood lumber business, and the potential for redirecting sales of lumber to countries outside the United States. The discussion is expanded to include other products besides lumber, and used to examine, for example, the effects of log export restrictions by one naton on all other forestry jurisdictions, the impacts of climate policies as they relate to the global forest sector, and the impact of oil prices on forest product markets throughout the world.

The economic effect of forest policy changes in British Columbia: an event study of stock-market returns

1995 ◽  
Vol 25 (6) ◽  
pp. 978-986 ◽  
Author(s):  
Daowei Zhang ◽  
Clark S. Binkley
Keyword(s):  
British Columbia ◽  
Stock Prices ◽  
Economic Effect ◽  
Forest Policy ◽  
Forest Products ◽  
Private Land ◽  
Policy Changes ◽  
Stock Market Returns ◽  
The Government ◽  
The Impact

In 1987 the government of British Columbia (B.C.) made substantial changes in its forest policy, including "clawing back" 5% of the volume committed on all of its replaceable licenses and shifting of reforestation costs to the licensees. Analysis of the reaction of stock prices to the announcement of these policy changes reveals that the policy had a negative, but not statistically significant impact on B.C. forest products companies taken as a whole. Those medium-sized B.C. forest products firms that own little private land and operate mainly in B.C. suffered small but statistically insignificant losses. The policy changes apparently did not affect large B.C. forest products firms and non BC-based forest products firms. The results may arise because (i) as a result of restrictions on log exports the volume reductions were simply reallocated within extant timber markets, (ii) timber from the replaceable licences is fully priced, (iii) the adjustments were small when compared with the overall market capitalization of the firms involved, and (iv) there was general financial euphoria in the late 1980 s. These findings should not be extended to larger policy adjustments or to the problem of evaluating the impact of province-wide reductions in allowable harvest levels.

scholarly journals The Structural Gravity Model and Its Implications on Global Forest Product Trade

Forests ◽  
2020 ◽  
Vol 11 (2) ◽  
pp. 178 ◽  
Author(s):  
Christian Morland ◽  
Franziska Schier ◽  
Holger Weimar
Keyword(s):  
Gravity Model ◽  
Traditional Approach ◽  
Forest Products ◽  
Forest Product ◽  
Estimation Methods ◽  
Forest Sector ◽  
Processing Level ◽  
History Of ◽  
Definition Of ◽  
The Impact

The gravity model of trade is one of the most common approaches in modern econometrics. In its basic form, the model assumes that income and distance between two partners most likely play a major role in the occurrence of trade. Despite the long history of the gravity model and its high, universal explanatory potential, its application for the forest sector is not broad and refers only to the traditional definition of the gravity approach. However, this traditional approach is not able to explain all aspects of trade at a disaggregated sector level. Consequently, the present study aims to close this research gap and reveal influencing factors for the appearance and the intensity of forest product trade by applying the structural gravity approach. This is done via linear and non-linear estimation methods for the forest sector on the whole and for thirteen forest products in detail. Three major results were found: first, the traditional gravity approach overestimates the impact of the overall income on forest sector trade. Second, the appearance of wood market trade is not always influenced by the same factors as the quantity traded. Third, with increasing processing level, determinants of forest product trade seem to be influenced by different factors.

scholarly journals The status of and recent trends in forest sector research in British Columbia

1999 ◽  
Vol 75 (4) ◽  
pp. 607-613 ◽  
Author(s):  
Clark S. Binkley ◽  
Susan B. Watts
Keyword(s):  
British Columbia ◽  
Forest Policy ◽  
Forest Products ◽  
Forest Sector ◽  
Research Activity ◽  
Forestry Research ◽  
Funding Sources ◽  
Sector Research ◽  
The Status ◽  
Forest Renewal

In the decade between 1988 and 1998, expenditures on forest sector research in British Columbia have increased substantially in absolute terms but have fallen in relation to the scale of the province's forestry enterprise. These aggregate trends mask important shifts in funding sources and in the specific fields of research that have been supported. The crown corporation Forest Renewal BC has emerged as the dominant source of support for forestry research, clearly displacing appropriated funds with-in the B.C. Ministry of Forests. As a result of falling stumpage fees and changes in forest policy, this source of support is now declining and the long-term security of the Forest Renewal BC research program is in question. At present, expenditures on forestry research are more or less consistent with expenditures on forestry research in other advanced forested jurisdictions, but the anticipated decline in Forest Renewal BC research support belies this otherwise favourable finding. Expenditures on forest products research in the province have not matched their counterparts elsewhere in the world, and recently have declined precipitously. Forestry – forest conservation, management, products and production processes – is becoming ever more complex. Research activity in the province does not appear adequate to sustain the flow of economic and ecological wealth from forests that British Columbians have always enjoyed and have come to expect.

scholarly journals THE IMPACT OF BANK RESTRUCTURING ANNOUNCEMENT ON THE BANKING STOCK PRICES: The Cases of Indonesia’s Banking Reforms on March 13, 1999, and The Issuance of Government Bonds on May 28, 1999

2018 ◽  
Vol 1 (2) ◽  
pp. 37
Author(s):  
Muhammad Fendi Susiyanto
Keyword(s):  
Stock Prices ◽  
Abnormal Return ◽  
Stock Exchange ◽  
Abnormal Returns ◽  
Good News ◽  
Government Bonds ◽  
Private Banks ◽  
Event Date ◽  
Banking Reforms ◽  
The Impact

This study is an event study that aims to investigate how successful the banking reforms measures that has already been done by the Indonesian government in order to strengthen its banking system. There were two events to be investigated in this study, first (1) The banking reforms announcement on March 13, 1999 which consists of the closure of 38 private banks, the taken-over of 7 private banks, 9 private banks will be recapitalized, and let 73 private banks to continue their operation without joining the recapitalization program; second (2) on May 28, 1999 Minister of Finance issued government bonds amounted to Rp 103,831 trillion to complete the private banks’ recapitalization, and also issued the other government bonds to repay the obligations of frozen commercial banks’ and rural banks’ regarding its liquidity support, to Bank Indonesia amounted to Rp 53,779 trillion.These two events above, are expected to be good news or favorable information for investors on the Jakarta Stock Exchange (JSX), and should be responded positively by investors which indicates significantly increases on banking stocks after the event dates.Thirteen samples of banking stocks which were listed on the Jakarta Stock Exchange (JSX) at the beginning of 1997 were used to investigate the reaction of banking stocks around the dates of these two events. By using the paired-samples mean difference test, we did not find significant differences between abnormal returns before and after the event dates. Furthermore, the cumulative abnormal return of banking stocks around the banking reforms announcement on March 13, 1999 and the issuance of government bonds announcement on May 28, 1999 were decreasing gradually until it reached the negative area. Trading Volume Activity (TVA) test, on the banking stock volume around the banking reforms announcement on March 13, 1999 has found that TVA of banking stocks after the event date was significantly greater than TVA of banking stocks before the event date. The result was not found on the issuance of government bonds event.In general, from these results, it can be concluded that the banking reforms measures done by the government was not successfully implemented from the market’s point of view.The abnormal return tests have been conducted, yet it is still found a significant abnormal return around both the banking reforms announcement on March 13, 1999 and the issuance of government bonds announcement on May 28, 1999. These findings did not support the semi-strong efficiency of the Jakarta Stock Exchange (JSX).

Modeling the effect of changing market conditions on mountain pine beetle salvage harvesting and structural changes in the British Columbia forest products industry

2009 ◽  
Vol 39 (10) ◽  
pp. 1806-1820 ◽  
Author(s):  
Olaf Schwab ◽  
Thomas Maness ◽  
Gary Bull ◽  
Don Roberts
Keyword(s):  
British Columbia ◽  
Mountain Pine Beetle ◽  
Structural Changes ◽  
Forest Products ◽  
Wood Products ◽  
Forest Sector ◽  
Ecological Processes ◽  
Mountain Pine ◽  
Pine Beetle ◽  
Salvage Harvesting

This paper describes the development and implementation of Cambium, an agent-based forest sector model for strategic analysis. This model is designed as a decision-support tool for assessing the effects that changes in product demand and resource inventories can have on the structure and economic viability of the forest sector. Cambium models aggregate product supply as an emergent property of individual companies’ production decisions and stand-level ecological processes. Modeling the forest-products sector as a group of interacting autonomous economic agents makes it possible to include production capacity dynamics and the potential for mill insolvencies as factors in analyzing the effects of market and forest inventory based disturbances. The utility of this model is tested by assessing the impacts of a market downturn in the US forest products market on forest industry structure and mountain pine beetle ( Dendroctonus ponderosae Hopkins) salvage harvesting in British Columbia, Canada. Simulation results indicate a significant medium-term timber supply shortage; reduced stumpage revenues; intensive cost competition among primary wood-products manufacturers; and a large number of insolvencies in the panel, lumber, and pulp sectors.

scholarly journals The Impact Of Political Instability Driven By The Tunisian Revolution On Stock Market Volatility: Evidence From Sectorial Indices

2018 ◽  
Vol 34 (2) ◽  
pp. 339-354 ◽  
Author(s):  
Salma Zaiane
Keyword(s):  
Stock Exchange ◽  
Bad News ◽  
Good News ◽  
Stock Market Volatility ◽  
Asymmetric Effect ◽  
Political News ◽  
Stock Indices ◽  
Terrorist Acts ◽  
Tunisian Revolution ◽  
The Impact

The aim of this paper is to study the impact of political uncertainty, driven by the Tunisian Revolution, on return and volatility of major sectorial stock indices in the Tunisian Stock Exchange. We specifically use EGARCH (1.1) model from 01/12/2010 to 31/08/2016. This model is applied to the daily returns relevant to ten sectorial stock indices and to the Tunisian benchmark index (TUNINDEX). To test the impact of political news on returns and volatility, we divided them into two groups (good and bad news). Our results show that both of good and bad news have increased the volatility of major selected indices, including the TUNINDEX. However, the return of all indices are not affected by the political news. We then examined the impact of terrorism on the behavior of indices return and volatility. Results show that the Tunisian market responds significantly to terrorist acts. Hence, the return declines and the volatility increase the day of terrorist attacks. Furthermore, results confirm that bad news have stronger effect on the volatility than good news, which reveal the asymmetric effect of volatility.

scholarly journals Creating a knowledge-based forest sector

1993 ◽  
Vol 69 (3) ◽  
pp. 294-299 ◽  
Author(s):  
Clark S. Binkley
Keyword(s):  
United States ◽  
British Columbia ◽  
Forest Products ◽  
Well Being ◽  
The United States ◽  
Forest Sector ◽  
Economic Decline ◽  
Managed Forests ◽  
Research Strategies ◽  
Knowledge Based

Traditionally an industry based on plentiful natural resources, the forest sector in British Columbia must be transformed to include a far higher amount of technology if its prosperity is to be sustained. Only by embodying a larger technological component in its products and processes can the forest sector offset the economic decline usually associated with the transition from old-growth to secondary, managed forests. Research will also increase the contribution the forests themselves can make to our economic and environmental well-being. Because of its position as a large producer of forest products, effective research strategies for British Columbia (and probably for Canada more broadly) will differ substantially from those pursued by major consuming nations such as the United States or Japan.

Secondary manufacturing in British Columbia: Structure, significance and trends

2001 ◽  
Vol 77 (2) ◽  
pp. 301-308 ◽  
Author(s):  
Bill Wilson ◽  
Brad Stennes ◽  
Sen Wang ◽  
Louise Wilson
Keyword(s):  
British Columbia ◽  
Manufacturing Industry ◽  
Value Added ◽  
Forest Products ◽  
Solid Wood ◽  
Decision Makers ◽  
Forest Industry ◽  
Forest Sector ◽  
Product Sales ◽  
Secondary Manufacturing

Similar to many other jurisdictions, British Columbia (BC) is no longer able to expand forest sector production and employment by drawing upon additional timber reserves, so it is seeking to expand value-added (i.e., secondary) manufacturing in forest products. Given the significance of the forest sector to BC, it is important that decision-makers seeking to promote an expansion in secondary manufacturing have accurate sector information. This paper presents the results of a 1998-99 survey of the BC solid wood secondary manufacturing industry. The project gathered operational, employment, production, marketing and financial information on nine defined product groups of business types (BTs) for 1997. The industry information is analyzed to provide a quantitative and qualitative examination on the current structure and significance of the sector, and a discussion on the major challenges confronting secondary manufacturing. An analysis of sector trends is also provided.Sector employment for nine business types totalled 19 490 person years and total sector sales an estimated $3.87 billion (about 22% of total BC forest product sales). Sales for seven business types (excluding panelboards, shakes and shingles) totalled $2.69 billion, up about 40% from 1994 measured in nominal dollars. Direct employment coefficients for a standard volume of timber equivalent are estimated for each of the business types. Key words: forest industry, value-added, employment, markets, policy

The status of forestry research in British Columbia

1992 ◽  
Vol 68 (6) ◽  
pp. 730-735 ◽  
Author(s):  
Clark S. Binkley ◽  
Susan B. Watts
Keyword(s):  
British Columbia ◽  
Forest Products ◽  
The United States ◽  
Forest Sector ◽  
Third Generation ◽  
Economic Returns ◽  
Research Organizations ◽  
Research Expenditures ◽  
The Status ◽  
Forestry Products

A survey of forestry and forestry products research in British Columbia indicates that the various research organizations in the province (e.g., Ministry of Forests, Forestry Canada, forest products companies, NSERC, and Universities) spent $71.1 million on research in 1991. This amounts to about 0.69% of gross sales, a figure that is less than half the research expenditures by such key competitors as the United States or Sweden. Although the economic returns to forestry and forest products research apparently are high, the failure to allocate more funds to research and development stems from a failure to conceptualize research as part of a larger forest sector strategy. Adopting this "third generation" approach to research planning would insure that research results are actually implemented, and would probably result in appropriately larger expenditures in this area.

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