Stumpage price expectations: an empirical analysis of nonindustrial private landowners in the Mid-Atlantic states

Abstract

Numerous empirical studies outside of forestry have analyzed the role of price expectations in different decision processes. Empirical studies using price expectations in forestry research is a relatively new field of endeavor. Past studies have typically ignored or given cursory treatment to the role of price expectations.

This study provides a review of studies in forestry that have attempted to incorporate price expectations into model formulations. Models are then developed to explain the short-run harvest, and long-run regeneration expenditure decisions by the non-industrial private forest owner, incorporating different distributed lag formulations to account for price expectations.

The estimated models for the short-run harvest decision, using cross sectional non-aggregated data, indicates that price expectations play a significant role in this decision process. Therefore, price expectations should be incorporated in some form, (i.e. different forms of distributed lags), to properly specify models. Estimated models for the long-run regeneration expenditure decision indicates a weak link between economic variables and the regeneration decision.

For both types of models, estimated coefficients for personal characteristics of landowners are in general considered insignificant, indicating the lack of influence that personal characteristics have on these decision processes