Market impacts of a multiyear mechanical fuel treatment program in the U.S.

We describe a two-stage model of global log and chip markets that evaluates the spatial and temporal economic effects of government-subsidized fire-related mechanical fuel treatment programs in the U.S. West and South. The first stage is a goal program that allocates subsidies according to fire risk and location priorities, given a budget and a feasible, market-clearing market solution. The second stage is a quadratic welfare maximization spatial equilibrium model of individual State and global product markets, subject to the fuel treatment allocation. Results show that the program enhances timber market welfare in regions where treatments occur and globally but has an overall negative economic impact, once fuel treatment program costs are included. The overall cost of a mechanical fuel treatment program, when considering timber market welfare, transport costs, treatment costs, and timber receipts, exceeds $1000 per acre, implying that the long run fire effects and ecosystem net benefits of a treatment program would need to exceed this figure in order to justify widespread implementation.