Productive and exchange scarcity: an empirical analysis of the U.S. forest products industry

This paper has two aims: clarification of several aspects of the debate on the appropriateness of various indicators of natural resource scarcity and the empirical analysis of the trends in the scarcity of forest products in the U.S. Two distinct types of indicators are developed in the natural resource scarcity literature, which we term exchange scarcity and productive scarcity. In the neoclassical paradigm, the former is measured by price and rental rates, and the latter by unit cost. In the biophysical literature, productive scarcity is measured by quality-weighted measures of unit energy cost. We test econometrically for trends in lumber prices in the long-run period 1800–1990, for trends in stumpage prices between 1910 and 1989, and for trends in productive scarcity indicators in the shorter 1947–1990 period. The empirical evidence indicates that the growth in the price of forest products as compared with other manufactured goods, and in the rental rate of timberland, levelled off during the post-war period in the U.S. Nevertheless, these commodities are today much more scarce than in the historic past. From the end of the 1950s, absolute and relative productive scarcity declined as measured by all indicators. The levelling off of the price of forest products after 150 years of increase is consistent with economic theory that predicts that prices reach a plateau when extraction from old-growth forests is replaced by forest plantations and replanting in general.