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If America Had Canada's Stumpage System

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The North American lumber market is integrated and, under normal conditions, provides unhindered access to all suppliers. North American log markets, in contrast, function on different principles: in one principle, a profit allowance for the wood processor plays a role in timber pricing, whereas in the other it is a byproduct of the give-and-take of arm's length market negotiations. Under the first system, markets are characterized by high elasticities of price transmission and, at times of market weakness, by low elasticities of product supply. Under the second system, the opposite of these benchmarks prevails. This can result in asymmetric supply responses in weak markets, to the detriment of U.S. producers. Whether this is a subsidy in the sense of conferring a direct financial contribution by the government or merely a more efficient pricing mechanism is beclouded by the dearth of market-based transactions. The challenge in the lumber dispute then is to devise a system of pricing in Canada that is more transparent in regard to the underlying valuation of timber.

Keywords: Lumber trade; pricing; softwood lumber; trade dispute

Document Type: Research Article

Affiliations: Henry Spelter, Economist, USDA Forest Service, Forest Products Laboratory, One Gifford Pinchot Drive, Madison, WI 53726—Phone: (608) 231-9380;, Fax: (608) 231-9592

Publication date: August 1, 2006

More about this publication?
  • Forest Science is a peer-reviewed journal publishing fundamental and applied research that explores all aspects of natural and social sciences as they apply to the function and management of the forested ecosystems of the world. Topics include silviculture, forest management, biometrics, economics, entomology & pathology, fire & fuels management, forest ecology, genetics & tree improvement, geospatial technologies, harvesting & utilization, landscape ecology, operations research, forest policy, physiology, recreation, social sciences, soils & hydrology, and wildlife management.
    Forest Science is published bimonthly in February, April, June, August, October, and December.

    2015 Impact Factor: 1.702
    Ranking: 16 of 66 in forestry

    Also published by SAF:
    Journal of Forestry
    Other SAF Publications
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