Timber price dynamics following a natural catastrophe

  • Authors: Prestemon, Jeffrey P.; Holmes, Thomas P.
  • Publication Year: 2000
  • Publication Series: Miscellaneous Publication
  • Source: American Journal of Agricultural Economics. 82: 145-160.


Catastrophic shocks to existing stocks of a renewable resource can cause long-run price shifts. With timber, these long-run price shifts may be accompanied by a short-run price drop due to salvage. Hurricane Hugo damaged 20 percent of southern pine timber in the South Carolina Coastal Plain in 1989. To estimate the short- and long-run effects of the hurricane on the prices of timber stocks, the authors estimated an intervention model of the residuals of cointegration of South Carolina sawtimber and pulpwood stumpage prices with prices of similar products from other regions. Modeling revealed a 30 percent negative price spike due to salvage and a long-run enhancement effect, leading to prices that are 10 percent to 30 percent higher than they would have been had Hugo not occurred.

  • Citation: Prestemon, Jeffrey P.; Holmes, Thomas P. 2000. Timber price dynamics following a natural catastrophe. American Journal of Agricultural Economics. 82: 145-160.
  • Keywords: differences-in-differences, cointegration, hurricane, hugo, timber, southern pine
  • Posted Date: April 1, 1980
  • Modified Date: May 18, 2010
  • Requesting Print Publications

    Publication requests are subject to availability. Fiscal responsibility limits the hardcopies of publications we produce and distribute. Electronic versions of publications may be downloaded, distributed and printed.

    Please make any requests at pubrequest@fs.fed.us.

    Publication Notes

    • This article was written and prepared by U.S. Government employees on official time, and is therefore in the public domain.
    • Our online publications are scanned and captured using Adobe Acrobat. During the capture process some typographical errors may occur. Please contact the SRS webmaster if you notice any errors which make this publication unusable.
    • To view this article, download the latest version of Adobe Acrobat Reader.