A 100 percent reduction in federal log supply is very damaging to the wood products
sector. Output is reduced 56 percent relative to the baseline with a 72 percent reduction in wood
products employment (Table 3). Under the assumption that households receive unemployment
transfers. Incomes of low, medium, and high income households in the five county region decline
by 0.6, 2.5, and 2.8 percent respectively (Table 3).
Looking at the ripple effect of the log shock on the regional economy, the agricultural
sectors are basically unaffected. The higher regional prices for logs and wood products cause
these production costs to go up, but these costs are offset by decreased regional price on other
inputs that on balance result in slightly greater employment and income in the agricultural sectors
(Table 4). The construction sector is damaged by higher cost wood products and smaller
household income and sheds about two percent of baseline jobs for the 100 percent reduction in
federal log supply (Table 4). Hitech manufacturing is minimally affected by the run-up in wood
product cost since most of the demand source for these products is outside the local economy,
and very little of the cost structure is in wood products. Overall production and employment in
this sector is basically unchanged. Other manufacturing (Omanu) is a different story. Here the
increased cost of logs and wood products has a measurable impact on production cost and the
sector loses both jobs and factor income in the amount of roughly 8 percent of baseline figures for
this sector. Next to logging and wood products, other manufacturing is the most heavily
damaged sector in the economy (Table 4).
The economic impact on the service sectors’ ranges between 1 and 3 percent of baseline
employment and income depending on the sector. Wholesale and retail trade sectors are the most
impacted with nearly a 3 percent reduction in income and employment, while the financial sectors
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