Changes in the Market of Precious Wood: A Case Study of Submission System in Poland

A timber market occupies a very particular position within the economic reality. Trading of commodities such as precious timber is, indeed, strongly conditioned by the carrying capacity and the silvicultural potential of the forest ecosystem. Timber markets in Poland are characterized by a controlling position of the State Forests, and one of the possible forms of wood sale is the system of submission. A submission usually implies that small quantities of wood with unusual features are being offered to a specific group of customers. The paper presents the sale results and prices of veneer wood commercialized in submission systems and in other forms of timber sale in the territory of Krosno during the years 2000−2019. It is one of the oldest submission markets in Poland, where the most expensive log ever in Poland was sold (13,000 USD/log—close to 7000 USD/m3). The Regional Directorate of State Forest (RDSF) of Krosno is located in the south-eastern part of Poland and manages a forest area of approximately 400,000 hectares. Annual timber harvesting amounts to 2 million m3, of which less than 2000 m3 annually is allocated to the submissions. The data cover a 20-year continuous time series and allow tracing changes in the wood volume offered to the market, the species population structure, and price trends for individual species. The data are being discussed against the background of the economic situation and in relation to the average prices obtained from other methods of sale. Beech was the most sold, but the demands for oak and sycamore appeared to be particularly high during the period of observation. The unity prices can be very variable even for wood from the same species, especially for sycamore. The prices are generally demand-driven and show strong influences from furniture industries and fashion. A rising demand for high quality timber and logs of big dimensions has been noticed. The submission system results in substantial economic benefits for the forest management and the region as a whole.

Input substitution and relative input price variability in timber markets

Timbers of multiple tree species and sizes are often traded in a single market. Some previous studies have empirically examined their price interdependences, but the drivers of such relationships remain unclear. I demonstrated with a rational expectations model that when timbers of two species (or sizes) were gross substitutes in production, the steady-state ratio between their prices was dependent on their relative quality and ease of substitution in production. The relative input price variability−the variance of the deviation of the relative price from its steady-state value−was a function of shocks in tree growth and demand for the output, negatively related to the ease of substitution. A case study illustrates that the relative price between pine pulpwood and hardwood pulpwood drastically decreased and so did its variance from 2001 to 2016, as compared to 1986 to 2000, in the U.S. southern region, whereas the relative price between pine pulpwood and pine chi-n-saw was more stable. One possible explanation was that the emergence of novel forest products may have altered the relative quality and substitutability between pine pulpwood and hardwood pulpwood in the manufacturing process.

A Cointegration Analysis of the Nordic Roundwood Markets

The integration of the Nordic timber markets has been analysed to provide market information to various decision-makers, e.g., climate and industrial policies and investment decisions. This study addresses the interlinkage between Nordic (Sweden, Norway and Finland) roundwood markets (Scots pine (Pinus sylvestris L.)) and Norway spruce ((Picea abies L.) sawlogs and pulpwood). In total, eleven markets were analysed using quarterly data over the period 2006Q1–2017Q4 where various unit root and stationary tests were performed together with Johansen’s cointegration test. In addition, directional causality analyses between the integrated markets were also performed. The results show that the law-of-one-price (LOP) hypothesis can be rejected for most of the studied markets and that no individual market emerges as the price-leader. Only the Swedish and Norwegian pine sawlog markets are integrated suggesting a single market for both countries. Price affecting national and forest-related policies as well as investments in the forestry sector, forest industries, bioenergy sector and other forest product using sectors, will not disperse into a larger international market structure; instead, the price effect will be national and more likely have a more profound effect.

Estimating Price Dynamics in the Aftermath of Forest Disturbances: The Biscuit Fire in Southwest Oregon

Catastrophic forest disturbances, such as wildfires, insect outbreaks, and hurricanes, have become more frequent in recent decades. Such disturbances can create supply disruptions in regional timber markets, with potentially significant short-run and long-run price effects. We review the time-series intervention models that have been used to analyze the impacts of forest disturbances. We apply the intervention models to investigate the market effects of the Biscuit Fire that burned nearly 500,000 acres (202,000 hectares) of forest land in southwest Oregon in 2002, thus creating an unexpected supply shock in the regional timber markets. Most of the burned area was located on federal lands. Although almost two billion board feet were available for harvesting by some estimates, the salvage logging on public lands after the Biscuit Fire amounted to 60 million board feet by the end of 2005. We use a univariate and reduced-form model to estimate the effect of the Biscuit Fire on regional Douglas-fir log markets. We find that the fire did not cause immediate price effects; however, we detect positive effects during the salvage logging period in some of the markets, whereas a negative long-run effect has persisted since the salvage logging period was completed.

Public innovation and changes in communal access to timber in the northern Bolivian Amazon

The paper assesses the effects of public innovation initiated by demands from communities in the northern Bolivian Amazon to revise forest regulations and policies. Bolivia enacted wide-reaching land and forest reforms in the mid-1990s, but these reforms were insufficient to tackle competing claims on forests and exclusion of local forest users from benefiting from timber production. Pressures by forest communities resulted in significant adjustments in regulations and policies, and the main driver was social pressure from communities as well as their representatives. The adjustments have allowed communal local practices, which were previously illegal, to become legal. They have allowed communities access to timber markets, improve incomes, and enhanced compliance with timber regulations.