The simulated national price change scenarios show is that relatively modest increases in
the national log price and wood product price more than mitigate the impact of the 50 percent
reduction in federal log supply. Log price increases (exports and imports) by themselves are very
beneficial to the logging sector, but harmful to downstream sectors that use logs as an
intermediate input. A 5 percent increase in national log price (with the 50 percent reduction in
federal log supply) results in a 19 percent increase in private log output. The wood products
sector, however, is damaged by the national log price increase. Output declines by 37 percent
relative to the baseline and employment declines by 40 percent. In terms of changes in regional
household income, the change in income is almost unchanged from the change from the federal
log shock with no national price effect. The increased income and employment in logging is
almost offset by decreased employment and income in wood products. However, when the
national price increase extends to the wood product sector as well, the story is very different.
Assuming a 5 percent increase in log price and a 3 percent increase in wood product price,
instead of the above noted 37 percent output decline, model results indicate only a 14 percent
decline in wood products output. Logging output increases by 18 percent, but the increase in
imported logs increases by a remarkable 80 percent. The increase in wood product price allows
increased log imports even in the face of an increased price for imported logs.
In a scenario where log prices are increased by 5 percent and wood products prices are
increased by 6 percent, the negative regional household income effects of the federal log shock
are totally mitigated. Regional household income is actually increased by 1 percent over the
baseline level and regional employment is increased by 1.3 percent. Employment in the logging
sector is increased by 32 percent over baseline levels and employment in the wood products
sector is increased by 15 percent over baseline levels. The regional sector that is most damaged
15