NATURAL RESOURCE SUPPLY CONSTRAINTS AND REGIONAL ECONOMIC ANALYSIS: A COMPUTABLE GENERAL EQUILIBRIUM APPROACH

revenues, and other variables are presented. Effects on income distribution are highlighted under
the different modeling assumptions.

Short-Run Scenario

Table 3, presents the short-run microeconomic results for the logging and wood product
sectors of the regional economy as percentage changes from their respective baseline values for
each hypothetical Forest Service harvest level.⁹ The short-run economy-wide changes in
employment and factor income, by industrial sector, are presented as percentages from baseline
levels in Table 4. As shown, the short-run impact of a reduction in logging of federal timber is
mixed depending on the severity of the reduction. For reductions in federal supply up to 50
percent of the baseline, output of private logs increases slightly but is allocated away from export
markets to supply regional mills (Table 3). Log imports increase 34.7 percent, but total log
supply in the region falls. For a 50 percent reduction in federal log supply, wood processing
sheds almost one fourth of baseline employment (928 jobs) largely due to the increased cost of
purchasing higher priced logs. Incomes of low, medium, and high income households decline by
0.2 percent, 0.91 percent and 1.02 percent, respectively. For reductions larger than 50 percent of
the baseline supply, private log output is reduced. At the zero supply of federal logs, the private
output of logs is reduced by 20 percent with logging employment falling by 31 percent. This
stems largely from the run-up in price of regionally supplied logs which chokes off demand from
the wood product sector. For the 100 percent reduction in federal log supply, total log supply to
the region (Q) is down 38 percent in spite of an increase in log imports of 97 percent (Table 3).

⁹For a description of the model sectoring scheme, see Appendix A. EMPLOY is the
number of jobs in a given sector. LAB is the wage bill or labor payments, PROPR is proprietor
payments, and CAP is payments to corporate capital all reserved in millions of dollars. All other
variables, except prices, are measured in millions of dollars.

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