Mountain Pine Beetle, Global Markets and the British Columbia Forest Economy

A number of near-term timber supply shocks are projected to impact global forest product markets, particularly mountain pine beetle induced timber reductions, a Russian log export tax, and timber supply increases from plantation forests in the Southern Hemisphere and Sweden. We examined their effect on a number of global jurisdictions using a dynamic global forest products trade model that separates British Columbia (BC) into coastal and interior forest sectors. The results suggest that global increases in plantation timber would have negligible effects on BC log and lumber markets, that the Russian tax would have minor effects on this market, and that the beetle-induced timber supply drop would moderately increase BC prices (primarily log prices). In the United States South, lumber and log prices could rise as a result of the mountain pine beetle, while other shocks will have a negligible impact on prices. Yet, lumber production will fall because log prices will increase substantially more than lumber prices. Japan could be impacted much more than other regions by the Russian tax on log exports. In the absence of export taxes, a beetle-induced timber shortage would cause lumber production in Japan to rise (as Japan can access nearby Russian logs), while the export tax would reduce lumber production because log prices rise disproportionately more than in other regions