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The Effect of Stumpage Rates on Timber Recovery

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  • Harry J. Paarsch

Abstract

Governments often sell the right to harvest timber on public land. If timber is of heterogeneous quality and timber pri ces reflect this heterogeneity, then charging a fixed stumpage rate per cubic meter of timber harvested independent of timber quality can induce the economically inefficient practice of harvesting only the best grades of timber, "high-grading." Charging a lump sum that is independent of the volume of timber harvested yields the efficient choice of minimum timber quality. With competitive bidding, the lump-sum scheme extracts all of the resource rent while the stumpage rate scheme leaves some rent in the forest.

Suggested Citation

  • Harry J. Paarsch, 1993. "The Effect of Stumpage Rates on Timber Recovery," Canadian Journal of Economics, Canadian Economics Association, vol. 26(1), pages 107-120, February.
    • Handle: RePEc:cje:issued:v:26:y:1993:i:1:p:107-20
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    Cited by:

    1. Niquidet, Kurt, 2008. "Revitalized? An event study of forest policy reform in British Columbia," Journal of Forest Economics, Elsevier, vol. 14(4), pages 227-241, November.
    2. M. Haley, 2010. "Bounding revenue leakages at scale-bid timber auctions: evidence from Wisconsin state forest auctions," Empirical Economics, Springer, vol. 39(2), pages 427-437, October.

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