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This paper describes the development and implementation of Cambium, an agent-based forest sector model for strategic analysis. This model is designed as a decision-support tool for assessing the effects that changes in product demand and resource inventories can have on the structure and economic viability of the forest sector. Cambium models aggregate product supply as an emergent property of individual companies’ production decisions and stand-level ecological processes. Modeling the forest-products sector as a group of interacting autonomous economic agents makes it possible to include production capacity dynamics and the potential for mill insolvencies as factors in analyzing the effects of market and forest inventory based disturbances. The utility of this model is tested by assessing the impacts of a market downturn in the US forest products market on forest industry structure and mountain pine beetle (Dendroctonus ponderosae Hopkins) salvage harvesting in British Columbia, Canada. Simulation results indicate a significant medium-term timber supply shortage; reduced stumpage revenues; intensive cost competition among primary wood-products manufacturers; and a large number of insolvencies in the panel, lumber, and pulp sectors. [ABSTRACT FROM AUTHOR]

In this paper, we investigate the impact of various socioeconomic conditions on the value of timber tenures in the province of British Columbia. Two timber tenure models were created, one for short-term timber sale licenses and the other for longer term forest licenses. The short-term model revealed that timber sales that were awarded according to a combination of employment, revenue, and manufacturing criteria yielded $8.63/m3 less revenue than timber sales awarded based on revenue alone. Similarly, the long-term model indicates that manufacturing and employment conditions significantly reduce the bid on forest licenses. In both instances, we suggest that such conditions distort the use of timber, labour, and capital. Therefore, we conclude that recent forest policy changes in the province that removed several of these conditions greatly improved economic efficiency. Nevertheless, distribution impacts are likely to be important because resource rents have potentially been redistributed away from rural communities to the provincial government. [ABSTRACT FROM AUTHOR]

On 14 April 1994, the British Columbia government announced a new stumpage formula that, at then-expected product prices, increased the average charge by about $12/m3 and more than doubled the rate at which stumpage fees change when lumber prices change. Most of the increased revenues are reinvested in the forest sector by a new organization, Forest Renewal British Columbia (FRBC), created specifically for that purpose. Using standard event-study methodologies, this paper documents the net effect of the fee increases and new policy direction on British Columbia forest products companies. After controlling for firm-specific risk and the decline in the Toronto Stock Exchange that occurred at about the same time, the new stumpage policy extracted about $1.0 billion from shareholders of the firms studied, andperhaps $2.4 billion from all licencees (an amount roughly equal to the capitalized after-tax cost of the higher fees). The impact on individual firms is highly correlated with the allowable annual cut (AAC) in replaceable licenses each holds, with an average impact of about$33.3/m3 of AAC. The market appears to have discounted both the good news about offsets in impending timber-supply reductions that the creation of FRBC implies and the reductions in earnings riskthat the new stumpage system provides. When added to the increased regulatory costs associated with the new provincial Forest Practice Code, the timber-fee increases appear to have fully depleted the value of holding British Columbia timber quotas. [ABSTRACT FROM AUTHOR]