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

by the higher log and wood product prices is other manufacturing which sheds 9 percent of jobs
and income. No other regional sector is damaged by as much as 1 percent in either income or
employment.

Summary and Conclusions

The results presented here emphasize the complexity of the answer to the question of how
dependent is the Northeast Oregon on logging and wood product industries. Data show that in
1997, 7 percent of regional employment was logging and wood product based. Consequently, by
most accounts, a sustained severe reduction in the availability of public timber resources will have
dramatic impacts on the existing regional economic structure. Our findings paint a somewhat
different picture.

Log Response on Private Lands

For moderate reductions in the supply of federal logs, production of logs on private land
responds to the supply deficit and the output of private logs increases. For reductions in federal
log supply greater than 50 percent of the base, the private output of logs begins to decline as a
function of the decrease in regional log demand that stems from the run up in regional log price.
The increase in regional log price harms the competitiveness of the regional wood products
sector. It is reductions in output, employment, and income in wood products that define most of
the damage that stems from reduction in federal log supply.

Unemployment Compensation

The treatment of unemployment transfers made some difference in the regional assessment
of the log shocks. Unemployment compensation supports household income which, in turn,
supports household consumption. Household consumption affects the regional economy mainly
through the production of trade and services. The difference between counting unemployment

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