An Economic Analysis of Wood Production on Private Forest Land in West Central Alberta

The availability of fibre from private land in Alberta has been largely ignored. This is due mainly to a surplus of fibre from public land. However, much of this surplus has been allocated in recent years, so that fibre from private land is quickly becoming a potentially important wood supply for primary forest products firms in Alberta. This study concentrates on obtaining information from land owners in west-central Alberta. A market is presently available for a certain amount of fibre from private land in this area. The information from thirty-eight land owners was obtained with a personal interview survey conducted in May of 1989. Respondents were asked questions on the physical characteristics of their land, production costs from harvesting, questions realted to their socio-economic conditions, and uses of their forest land. In addition to a descriptive presentation of the survey results, the study includes the use of a model to evaluate the relative importance of certain variables as they may affect a land owner's decision to supply fibre now, and in the future. The responses from land owners that have supplied fibre, and those that have not were used in this analysis. The results from this modelling exercise show that land owners are particularly responsive to price, the amount of merchantable timber they have, and net returns from harvesting in deciding whether or not to supply wood in the future. Variables such as size of forest, presence of a management plan, and others, were not significant in predicting the supply choice variable. A discussion of market structures for private fibre is presented. The presence of transactions costs to both land owners and firms oin procuring private fibre are important characteristics of the market, and as such are analyzed in light of the modelling results. It is concluded that land owners' decisions to supply fibre can be influenced by policies that offset these transactions costs. Further conclusions illustrate how these market structure elements and the modelling results can be used to guide policies toward forest land owners