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

Natural Resource Supply Constraints and Regional Economic Analysis:
A Computable General Equilibrium Approach

Introduction

Recent concern over the viability of several native anadromous fish runs has jeopardized
traditional public land uses in the Pacific Northwest. Ecological disturbances caused by livestock
grazing and logging has been shown to adversely affect salmon spawning beds. In July 1999, the
Ninth Circuit U.S. Court of Appeals issued an injunction which could effectively stop grazing
activities (and eventually, perhaps, logging and road building) in the Umatilla and Wallowa-
Whitman National Forests for the purpose of preserving viable spawning habitat for threatened or
endangered salmon. As a result, the degree of future access to the public forest land for timber
harvest and cattle grazing is uncertain. While it is currently unclear what changes in logging
policy will be introduced, the relative importance of timber-related industries in a five-county
region of Northeast Oregon suggests that any reduction in the access to federal timber supplies
could have a significant impact on regional employment and income. Lumber and wood products
comprise 4101 jobs (6.9% of total employment) in this timber dependent five-county region and
30% of all logs harvested in the region come off federal lands.

Background

Historically, natural resource industries have provided a significant portion of Oregon’s
employment and income. In 1997, livestock and timber-related industries together directly
provided an estimated 105,000 jobs (not including several thousand resource management jobs in
federal, state, and local governments). This represents about 6.5 percent of total jobs and 7.7
percent of employee compensation paid in the state (Table 1). Given the historic importance of
natural resource industries to the Oregon economy a significant reduction in the rate of natural
resource use is likely to have a significant impact on the aggregate level of economic activity

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