Timber Price Dynamics Following a Natural Catastrophe
- 1 February 2000
- journal article
- research article
- Published by Wiley in American Journal of Agricultural Economics
- Vol. 82 (1) , 145-160
- https://doi.org/10.1111/0002-9092.00012
Abstract
Catastrophic shocks to existing stocks of a renewable resource can cause long‐run price shifts. With timber, these long‐run price shifts may be accompanied by a short‐run price drop due to salvage. Hurricane Hugo damaged 20% of southern pine timber in the South Carolina Coastal Plain in 1989. To estimate the short‐ and long‐run effects of the hurricane on the prices of timber stocks, we estimated an intervention model of the residuals of cointegration of South Carolina sawtimber and pulpwood stumpage prices with prices of similar products from other regions. Modeling revealed a 30% negative price spike due to salvage and a long‐run enhancement effect, leading to prices that are 10% to 30% higher than they would have been had Hugo not occurred.Keywords
This publication has 1 reference indexed in Scilit:
- STOCHASTIC PRICE MODELS AND OPTIMAL TREE CUTTING: RESULTS FOR LOBLOLLY PINENatural Resource Modeling, 1991