Estimating Price Dynamics in the Aftermath of Forest Disturbances: The Biscuit Fire in Southwest Oregon

Catastrophic forest disturbances, such as wildfires, insect outbreaks, and hurricanes, have become more frequent in recent decades. Such disturbances can create supply disruptions in regional timber markets, with potentially significant short-run and long-run price effects. We review the time-series intervention models that have been used to analyze the impacts of forest disturbances. We apply the intervention models to investigate the market effects of the Biscuit Fire that burned nearly 500,000 acres (202,000 hectares) of forest land in southwest Oregon in 2002, thus creating an unexpected supply shock in the regional timber markets. Most of the burned area was located on federal lands. Although almost two billion board feet were available for harvesting by some estimates, the salvage logging on public lands after the Biscuit Fire amounted to 60 million board feet by the end of 2005. We use a univariate and reduced-form model to estimate the effect of the Biscuit Fire on regional Douglas-fir log markets. We find that the fire did not cause immediate price effects; however, we detect positive effects during the salvage logging period in some of the markets, whereas a negative long-run effect has persisted since the salvage logging period was completed.