PRODUCTION ECONOMICS OF PRIVATE FORESTRY - A COMPARISON OF INDUSTRIAL AND NONINDUSTRIAL FOREST OWNERS

This paper compares the production behavior of industrial and nonindustrial private forestland owners in the southeastern U.S. using a restricted profit function. Profits are modeled as a function of two outputs, sawtimber and pulpwood, one variable input, regeneration effort, and two quasi-fixed inputs, land and growing stock. Although an identical profit function is rejected, the results indicate behavior consistent with profit-maximizing motives under both ownerships. The two ownerships have similar responses to input and output price changes, both in the short-run and in the long-run. However, nonindustrial owners appear to place a higher value on their standing timber and forestland than do industrial owners. The difference in estimated shadow values indicates that significant nonmarket benefits are being captured by nonindustrial owners and the benefits are reflected in their production behavior.