『地域政策研究』（高崎経済大学地域政策学会）

第３巻

第２号

2000年11月

35頁〜50頁

TACHIBANA, Satoshi
北米における環境保護運動が日本の針葉樹材貿易に与えた影響に関する実証的研究

立ABSTRACT:花

敏Foreign timber suppliers play a very important role in the Japanese timbermarket. They have been supplying more than 70% of Japanese timber demand since 1987.
Because both suppliers and Japan are under pressure from worldwide environmental
conservation movements, there are strong possibilities that the amount of log and lumber
imports into the Japanese market may decline drastically. This paper attempts to examine theforest-related situation around the environmental conservation movements in North America
from two different viewpoints. First, I would like to build a model to describe the softwood
timber trade structure in Japan including imports from U.S. and Canada. Second, I would liketo assess the impacts of the conservation policies on Japanese timber trade, such as theregulations on timber harvest in North America. In this study, I have developed a structuralmodel for the first end, and a reduced form model for the second. According to the estimates,
a 10% decrease of the timber harvest in Pacific Northwest may lead to 4.5% decrease ofsoftwood log exports and 13% rise of its export price. In contrast, the same reduction may
contribute to 13% diminution in U.S. lumber export and 14% increase in Canadian lumber
export to Japan leaving the lumber prices unchanged. A reduction of 10% in the timber harvest
in British Columbia may lead to 28% reduction of Canadian softwood lumber exports toJapan.

KEY WORDS: environmental conservation movements, Japanese softwood timber trade,reduced form model, structural model, timber harvest in North America− 35−

TACHIBANA Satoshi

INTRODUCTION
Several econometric models have been developed to analyze Japanese timber markets. Thosemodels have revealed many significant factors in Japanese timber markets. McKillop (1973) constructed an
econometric model with three supply functions and three demand functions, using quarterly data from 1950
to 1970. He concluded that the Japanese demand for lumber from North America was totally inelastic.
Gallagher (1980) built a softwood log trade model between U.S. and Japan with annual data during 1962-76,
and found out two important facts. Firstly, Japan's import demand and U.S. exports supply were pricesensitive in the log market. Secondly, the changes in the new housing construction starts and the domestic log
production in Japan were critical in explaining levels of U.S. log exports to Japan. Yukutake (1985)
developed a log and lumber trades model of Japan and connected his model to the Global Timber Model(GTM, Kallio et al. (1986)) of IIASA (International Institute for Applied Systems Analysis). He explained
the structure of log and lumber markets in Japan with 41 equations with annual data during 1961-82. Mori
(1991) developed a Japanese log trade model, dividing the log market into a domestic log market and an
imported log market. His results indicate that both the demand and supply of domestic log, and the supply ofimported log were inelastic with respect to their own prices from 1961 to 1986, while the demand for importlog was elastic. Vincent et al. (1991) examined Japanese timber trade structure of sawlogs econometrically,
utilizing annual data during 1970-87. They have concluded that the sawlogs from North America, the Soviet
Union and the South Seas were substitutes for each other during 1970-87, and that imports from each region
were affected by its relative net price of lumber (lumber price minus log input cost per unit of lumber).
Furuido et al. (1991) modeled to explain an increase in the softwood lumber export from U.S. to Japan. They
showed the importance of following three factors: the decline in the real lumber price in U.S. during 1965-84,
the rise in export price to Japan and the diminishing new housing construction starts in U.S. during 1985-89.
Nagata et al. (1992) attempted to model a coniferous wood trade between North America and Japan. They
implied that the real prices of timber were important factors in U.S. timber market, while nominal prices
played important roles in the Japanese market. Flora et al. (1994) modeled Japanese demands for theimported softwood log and lumber in the system of equilibrium models of Pacific Rim timber trade. And,
Tachibana (1997) made a whole scale econometric model for Japanese softwood timber markets and revealed
the full structures, utilizing the data between 1975-93.
Imported timber supply fulfilled 75% (83 million m3 in a log equivalent term) of the total Japanesetimber demand in 1993 and 78% (73million m3) in 1998. Japan has gradually shifted the imports of softwoodfrom logs to lumber. Japan imported 4.8 million m3 in softwood lumber and 17.7 million m3 in softwood logs
in 1980, while 8.9 million m3 and 14.7 million m3 respectively in 1993. The most important softwood log− 36−

Impacts of the Environmental Conservation Movements in North America on the Japanese Softwood Timber Markets: an Econometric Analysis

supplier to Japan is U.S., and the principal lumber supplier is Canada who has shipped small quantities oflogs to Japan. In contrast, imports from Russia were relatively small as the followings: 4.5 million m3 in log
and 0.3 million m3 in lumber in 1993. In the case of trade between U.S. and Canada, U.S. exported 1.8
million m3 logs and 0.74 million lumbers to Canada, whereas Canada exported 35.9 million m3 lumber withnegligible amount of logs in 1992. The magnitude of Canadian lumber export to U.S., that is 35.9 million m3
in 1992, is quite noticeable.
The issues of worldwide environmental conservation have cast considerable influences on theJapanese timber markets. For instance, the exhaustion of tropical forest has led to a decline in the tropical log
imports in quantity. The wild life protection movements in North America have put more restrictions on
harvesting activities that also contribute higher log prices. Johnson et al.(1995) found that a partial ban on
Washington log exports, in effect in 1991 and 1992, had not reduced Washington s timber revenue.
This paper develops a structural model and a reduced form model for Japanese softwood timbermarkets and assesses the impacts of the environmental conservation movements, especially the restrictions totimber harvest and log export in North America on the timber markets.

THEORETICAL MODEL
Figure 1 is a simplified flow diagram of Japanese softwood timber markets. Two major suppliers to
the log market are domestic forest owners and U.S. The domestic log supply and logs imports from U.S. aremodeled explicitly. The important lumber suppliers are domestic sawmills, Canada and U.S. The
domestically processed lumber and imported lumbers from Canada and U.S. are modeled. Log supplies from

Fig. 1 The Structure of Japanese Softwood Timber Markets− 37−

TACHIBANA Satoshi

Russia and other regions are treated as exogenous variables in the model, because the imports of theseregions are volatile.

1. Softwood round log markets in Japan(1) Domestic log
Domestic forest owners determine their log supply (SRJ), based upon their own forest stand volume(VJ with the expected sign+ ), the logging cost (CJ, -) and domestic log price (PRJ, +).
SRJ = f (PRJ, VJ, CJ)

Domestic sawmills decide domestic log demand (DRJ) considering the domestic log price (PRJ, -)and domestically processed lumber supply with a time lag (SLJ (-1), +). The capacity of sawmills (CPJ, +)plays as a scale factor in the demand.
DRJ = f (PRJ, CPJ, SLJ (-1))
The amount of domestic log demand is equal to that of domestic log supply in equilibrium.
DRJ ≡ SRJ
(2) U.S. log
The amount of log supply (SRA) from U.S. to Japan is determined with its own price (PRA, +), thetimber harvest volume (THA, +) and the new housing starts (HSA, -) in U.S.
SRA = f (PRA, THA, HSA)
The amount of U.S. log demand (DRA) in Japan is decided with its own price (PRAJ, -), and thelagged domestically processed lumber supply (SLJ (-1)). The log price is converted from U.S. dollar basis toJapanese yen basis. The sawmill capacity (CPJ, +) plays as a scale factor in the demand.
DRA = f (PRAJ, CPJ, SLJ (-1))
The demand for imported logs from U.S. in Japan is equated with the supply of logs from U.S. to
Japan in equilibrium.
DRA ≡ SRA

2. Softwood lumber markets in Japan(1) Domestically processed lumber
Domestic sawmills determine their lumber supply (SLJ) taking the domestically processed lumber
price (PLJ, +), log price (PRJ, -) and the log supply from Russia and the other countries (OTR) as given. The
capacity (CPJ, +) indicates their productivity.
SLJ = f (PLJ, PRJ, CPJ, OTR)
The demand for domestically processed lumber (DLJ) is a function of its own price (PLJ, -), theprice of imported lumber (PLS, +), which is to be a substitute, and the new housing construction starts with a− 38−

Impacts of the Environmental Conservation Movements in North America on the Japanese Softwood Timber Markets: an Econometric Analysis

lag (HSJ (-1), +) or lagged Gross Domestic Products (GDPJ (-1), +) in Japan. The housing starts or the GDP
plays as a scale factor in the demand.
DLJ = f (PLJ, PLS, HSJ (-1) or GDPJ (-1))
The domestically processed lumber demand is equated to its supply in equilibrium.
DLJ ≡ SLJ

(2) U.S. Lumber
The lumber supply (SLA) from U.S. to Japan is determined taking its own price (PLA, +), thestumpage price for saw timber (STPA, -), the timber harvest volume (THA, +) and the new housing starts in
U.S. (HSA, -) as given.
SLA = f (PLA, STPA, THA, HSA)
The demand (DLA) for U.S. lumber in Japan is a function of its own price based on Japanese yen(PLAJ, -), the price of substitutable lumber (PLS, +) and Japanese housing starts with a delay of time (HSJ (-1),+) or Japanese GDP with a lag (GDPJ (-1), +).
DLA = f (PLAJ, PLS, HSJ (-1) or GDPJ (-1))
The demand for the imported lumber from U.S. in Japan is equal to the supply of lumber from U.S.
to Japan in equilibrium.
DLA≡SLAc) Canadian lumber
Canadian lumber supply (SLC) to Japan is determined with its own price (PLC, +) and the timber
harvest volume (THC, +) in Canada. In this model the new housing starts of U.S. (HSA, -) is used as an
explanatory variable, because Canada exports a lot of lumber to U.S. at the same time and the new housing
starts in Canada is much smaller than U.S. So the situation of U.S. housing market has influenced strongly
upon Canadian lumber supply.
SLC = f (PLC, THC, HSA)
The lumber demand (DLC) in Japan is determined, taking its own price based on Japanese yen(PLCJ, -), the price of substitutable lumber (PLS, +) and Japanese new housing starts with a delay (HSJ (-1), +)or Japanese GDP with a lag (GDPJ (-1), +) as given.
DLC = f (PLCJ, PLS, HSJ (-1) or GDPJ (-1))
The demand for the imported lumber from Canadian in Japan is equated to the lumber supply from
Canada to Japan in equilibrium.
DLC≡SLC− 39−

TACHIBANA Satoshi

ESTIMATION RESULTS OF THE STRUCTURAL MODEL
The theoretical model described so far constructs a system of simultaneous equations. Theseequations are specified in the logarithmic linear in both sides. To estimate the coefficients of these equations,the two-stage least-squares (2SLS) is used to mitigate the simultaneous equation bias (Johnston, 1991) withannual data during 1973-93. The environmental conservation movements for the northern spotted owl inNorth America, especially in U.S. had been brisk up dramatically between the end of 1980’s and the
beginning of the 1990’s. So this study targets the period in which U.S. enacted Forest Resource Conservationand Shortage Relief Act(1990), and tightened the restrictions to timber harvest and log export.
Most of U.S. data are for Pacific Northwest: Oregon, Washington and Alaska, while Canadian data
are mainly for British Columbia. Domestic prices, import prices and the logging wage rate in Japan are
deflated using Japanese wholesale price index. Export prices are deflated by the producers' price index in thecorresponding country. The estimation results are showed in Figure 2.

1. Softwood round log markets in Japan(1) Domestic log[a] Supply equation
The coefficient of the domestic log price is positively significant, implying that a rise in the priceleads to an increase in the domestic log supply. The softwood standing volume contributes positively to thelog supply. On the other hand, the logging wage rate is negatively related to the supply as expected. The
estimated value shows that an increase of 10% in the wage rate leads to 6.4% decrease in supply. The timetrend was adopted in order to explain a continuous change in the supply structure. The estimated coefficientturns out to be negatively significant at the 1% level, indicating that the supply has been shifting downwards,
probably reflecting the factors such as the depopulation of mountainous villages and the advancing age
structure of logging laborers.
[b] Demand equation
The coefficient of the domestic log price is negatively significant as expected. The coefficient of
the sawmill capacity is 3.820 and positively significant at the 1% level, while that with a lag is -3.449 andnegatively significant. These estimated values jointly indicate that an increase of 10% in the capacity may
eventually lead almost 3.7% increase in the domestic log demand. The coefficient of the domestic processed
lumber supply with a lag is positive, implying that an increase in the lumber supply leads to an increase in the
demand in the following year.

− 40−

Impacts of the Environmental Conservation Movements in North America on the Japanese Softwood Timber Markets: an Econometric Analysis

Fig. 2 Estimation Results of The Structural Model
Softwood Round Log Markets in Japan(1) Domestic log[a] SRJ = 0.026 + 0.455PRJ + 1.711VJ - 0.643CJ - 0.072TT1(-0.005) (5.455***) (3.941***) (-4.678***) (-3.910***)R2=0.953, DW=1.805[b] DRJ = 8.893 - 0.546PRJ + 3.820CPJ - 3.449CPJ (-1) + 0.487SLJ (-1)(4.976***) (-3.254***) (4.063***) (-4.415***) (3.110***)R2=0.906, DW=1.495(2) U.S. log[c] SRA = -5.603 + 0.536PRA + 1.222THA - 0.222HSA - 0.291DM(-1.660*) (4.507***) (4.923***) (-1.429*) (-3.125***)R2=0.699, DW=1.531[d] DRA = -29.976 - 0.316PRAJ + 12.483CPJ - 9.337CPJ (-1) + 0.044TT2(-5.687***) (-3.359***) (11.848***) (-11.693***) (8.453***)R2=0.900, DW=2.022
Softwood Lumber Markets in Japan(1) Domestically processed lumber[e] SLJ = 6.998 + 0.633PLJ - 0.210PRAJ + 0.637CPJ + 0.163OTR - 0.022TT2(2.781***) (6.430***) (-3.782***) (4.386***) (1.993**) (-6.954***)R2=0.977, DW=1.525[f] DLJ = 8.443 - 0.218PLJ + 0.730HSJ (-1)(10.586***) (-1.991**) (13.063***)R2=0.905, DW=2.143(2) U.S. Lumber[g] SLA = -9.951 + 1.017PLA - 0.256STPA + 1.516THA - 1.209HSA + 0.128TT1 - 0.229TT3(-2.243**) (2.745***) (-2.249**) (4.248***) (-5.319***) (17.277***) (-3.801***)R2=0.974, DW=1.977[h] DLA = -8.119 - 0.882PLAJ + 2.076GDPJ (-1)(-1.031) (-2.287**) (7.134***)R2=0.885, DW=1.436(3) Canadian Lumber[i] SLC = -1.120 + 0.273PLC + 0.845THC - 0.431HSA + 0.049TT1(-0.214) (1.919**) (1.793**)(-1.811**) (5.015***)R2=0.934, DW=1.360[j] DLC = 5.189 - 0.693PLCJ + 3.473PLJ - 0.924DM(1.025) (-1.378*) (4.753***) (-3.822***)R2=0.659, DW=1.609
Notes:(1) The numbers in the parenthesis under the estimated coefficient indicate t-statistics of the coefficient. Superscripts ***indicates significance at 1% level, ** at 5% level and * at 10% level.
(2) R2: R-square of the estimated equation(3) DW: Durbin-Watson statistics of the estimated equation(4) Variable with (-1): the variable with a time lag− 41−

TACHIBANA Satoshi(2) U.S. log[c] Supply equation
The estimated coefficient for the own price, or the own price elasticity of U.S. log supply to Japan,
is positive and larger than that of domestic log supply. The timber harvest in U.S. has a positive effect on thelog supply to Japan. The fact that estimated value exceeds unity reveals that an increase or decrease in thetimber harvest leads to a further increase or decrease in U.S. log supply. The coefficient of the new housing
starts in U.S. is negatively related to the supply, but the t-value is relatively low. The coefficient value
indicates that the new housing starts have a small negative influence on the supply to Japan. This probably
reflects the fact that the logs supplied to Japan and consumed in U.S. are in different quality and constitutedifferent markets. The coefficient of dummy variable, which is designed to describe structural changes after
the first oil crisis, is negatively significant. It shows that U.S. log supply to Japan increased after the oil crisis
probably reflecting the changes in the exchange rate, freight and other market factors.
[d] Demand equation
The coefficient of the price is negatively significant, but showing the price elasticity is muchsmaller than that of the domestic log demand (equation [b]). The coefficient for the domestic sawmills
capacity is 12.483 and positively, while that with a lag is -9.337 and negatively significant. These estimatedcoefficients jointly show that a continuous increase of 10% in the capacity can eventually lead to 30% rise in
the demand. This percentage is almost eight times larger than that of the counter part for the domestic log
demand. The coefficient for time trend from 1973 up to 89 is positively significant, implying that the demandfor U.S. logs have continuously shifted upwards probably reflecting a preference change of Japanese
consumption, especially of the housing issues.

2. Softwood lumber markets in Japan(1) Domestically processed lumber[e] Supply equation
The price coefficient is positively significant. The figure indicates that a rise of 10% in the priceleads to 6.3% increase in the supply. As to input log prices, the coefficient of U.S. log price is negatively
significant, while the other log prices turn out insignificant. The coefficient of the sawmill capacity is
positively significant and has almost the same magnitude as that of the price. The coefficient for the log
supply of Russia and other regions is positively significant as expected. The coefficient of the time trend for
1973-89 is negatively significant. Taking equations for the log demand [b] and [d] together into
consideration, the estimation may be concluded that the log demand had drifted away from domestic to U.S.
logs during the period.

− 42−

Impacts of the Environmental Conservation Movements in North America on the Japanese Softwood Timber Markets: an Econometric Analysis[f] Demand equation
In the regression trials, the coefficients of the prices of substitutable lumbers, such as the price ofimported lumber from Canada, are insignificant and thus they are omitted from the report. The coefficient of
the domestically processed lumber price is -0.218 and negatively significant. The estimated value in theabsolute term is small, reflecting the price-irresponsive nature of the domestically processed lumber. The
domestic new housing starts with a lag is positively related to the demand. The estimate indicates thosesimultaneous and proportional increases in the lumber price and the new housing starts would lead to anincrease in the demand for the lumber.

(2) U.S. Lumber[g] Supply equation
The price coefficient is positively significant and nearly equal to 1, showing that U.S. lumber
export to Japan may increase at the same rate as the price rise. The stumpage price has a negative relation to
the supply as expected, but the absolute value of the coefficient is small, that is to say 0.25. The coefficientfor U.S. new housing starts is 1.209 and negatively significant, while that for the timber harvest is 1.516 andpositively significant. These estimates in the absolute term are larger than 1. The results may show that a
relatively small portion of the timber harvest has been exported to Japan, and hence it is strongly influenced
by the timber harvest level and the domestic demand in U.S. since the export is residual in nature in U.S.
lumber market. Comparing these two estimated values, the timber harvest in U.S. has a strong impact on U.S.
lumber supply to Japan. Taking account of equation [c] together, the timber harvest level in U.S., especiallyin Pacific Northwest, is very important for the Japanese timber markets. The coefficients for time trend in
1973-93 and in 1990-93 are both significant; the former is positive, while the latter is negative, indicating thatthe export supply to Japan has decelerated at the begging of the 1990’s.
[h] Demand equation
Because of insignificant t-values, the substitutable lumber prices are rejected. The own pricecoefficient is -0.882 and negatively significant, the value itself is indicating higher price responsiveness.
Japanese GDP with a time lag is positively related to the demand. The estimate shows that a rise of 10% in
the GDP would result in 20% increase in the demand. It indicates that the lumber demand in Japan has beenshifted strongly to U.S. lumber followed by the GDP increase.

(3) Canadian Lumber[i] Supply equation
Because of the lack of data, I have to estimate the export prices from 1973 to 84. The export pricedata after 1985 up to 1993 are available. These data are extrapolated to the missing dates based upon the− 43−

TACHIBANA Satoshi

export prices of “western hemlock” lumber from U.S. to Japan, because Canadian lumber exports to Japan are
mainly hemlock.
The coefficient for the export price is 0.273 and positively significant. The price elasticity of theCanadian lumber supply to Japan is small, probably reflecting the Canadian policy of promoting lumber
export, which is not necessarily priced responsive. The timber harvest in Canada has a positive effect on the
supply, while the new housing starts in U.S. have a negative impact. These two estimated values, which are
0.845 and -0.431 respectively, indicate that the timber harvest in Canada, especially in British Columbia, has
proportionally more influence upon the Canadian lumber supply to Japan than the new housing starts in U.S.
The coefficient of time trend from 1973 to 93 is positively significant, probably based upon the above policy.
[j] Demand equation
The price coefficient is negative, but the t-value is relatively small. The domestically processed
lumber price in Japan is positively related to the demand. Its estimated value or the price elasticity of thedemand is very large, implying that the demand for Canadian lumber is very sensitive to change in the priceof the domestically processed lumber. Several variables were put for the scale factors in the equation, but
none were accepted even with the 10% significant test.

ESTIMATION RESULTS OF THE REDUCED FORM MODEL
The model can be regarded as a block-wise recursive system. Hence majority of the endogenous
variables has relatively minor simultaneity; e.g., the first two equations have only two endogenous variables,i.e., SR J, DR J and PR J. Therefore, the corresponding reduced form equations have one of these two
endogenous variables as left-hand side and only those exogenous variables appearing in the first two
structural equations as right-hand side. The next stage sets up the reduced form equation system taking thisblock-wise recursive structure into consideration. The equations are specified in the logarithmic linear in bothsides and estimated with the ordinary least squares (OLS). The coefficients on the reduced form equations
should explain both of

directandindirectcontributions, that is to say the total contributions of theexogenous variables on the endogenous variables. The estimation results of the reduced form model are shownin Table 1.

1. Equilibrium quantity of the domestic log
The coefficient of the softwood standing volume is positively significant and about 1. It implies
that the standing volume may proportionally contribute to the equilibrium quantity of domestic logs. In otherwords, the domestic log will be able to increase in quantity at the same rate as the softwood standing volume
increase. The coefficient for the logging wage rate is negatively significant, showing that a rise of 10% in the− 44−

− 45−

0.146

0.871
(4.145)-2.042(-0.599)-1.405(-5.537) (13.68)-0.637(-3.342)-4.940(-1.149)

2.812

0.281
(6.640)

0.276

0.281

(3.211)(-3.408)(2.564) (5.256)

1.279-0.777-0.133(4.586)0.536(2.420)(-0.066)(16.75)(-7.309)(-2.619)(1.576)3.098-0.6286.398-43.02(6.091) (-6.050)(2.893)-2.538

3.271

4.918

-1.294(-9.203)

0.261-6.7677.834(13.80) (-12.21)

13.84(4.176)(3.033)0.446(4.629)10.15(11.02) (-9.998)-35.08(-6.993)-7.135(3.612)(2.039) (-3.867) (1.520)(4.094)0.121-2.707

0.830

19.96

0.436

TT1

(-3.446)

R/PPI*(2.169) (3.838) (-3.961) (6.308) (-7.275)

Notes: The numbers in the parenthesis under the estimated coefficient indicate t-statistic of the coefficient.
* indicates R: the exchange rate (¥/US$) and PPI: the producers' price index of the U.S.
R2, DW and (-1): the same as figure 2.

PLCJ

DLC&SLC

PLAJ

DLA&SLA

PLJ

DLJ&SLJ

PRAJ

SRA&DRAPRJ

SRJ&DRJ

THC-0.042THA-2.111

STPA

2.405

-0.482

0.987

6.725

HSA

CPJ (-1) GDPJ (-1) HSJ (-1) SLJ (-1)

CPJ

CJ

VJ

C

Table 1 Estimation Results of the reduced form model

0.548
2.230

0.016

2.130

0.939

1.765

0.779

1.605

(2.113)(3.330)0.088(-2.880)1.804(-3.759)

0.949

0.701

1.990

0.987

1.825

-0.017(3.929)

0.007

2.194
0.928

0.916

1.446

0.916

1.702

0.927

DW

R2

-0.046-0.140TT3(-9.897)

TT2

Impacts of the Environmental Conservation Movements in North America on the Japanese Softwood Timber Markets: an Econometric Analysis

TACHIBANA Satoshi

wage rate leads to 4.8% decreases in the equilibrium quantity. The estimated coefficients for the capacity ofsawmills without and with a lag, 2.4 and -2.1, reveal that 10% increase in the capacity may contribute to theequilibrium quantity increase of 3%. The coefficient of TT1 that is negative indicates that the equilibrium
quantity has been continuously shifted downwards during 1973-93.

2. Price of the domestic log
The coefficient for the softwood standing volume is negatively significant, indicating that the pricehas declined in 2.7 times more rapidly than the standing volume increased. The estimated coefficient of thelogging wage rate, 0.44, indicates that 10% rise in the wage rate may contribute to 4.4% increase of the log
price. If the wage rate increases continuously, the difference between the log price and the wage rate as a cost
factor in the term of cubic meter must be small gradually. The domestically processed lumber supply with alag has a positive impact on the price. The coefficient shows that 10% increase in the supply may lead to8.3% rise of the log price. The coefficient of TT1 is positive.

3. Equilibrium imports of U.S. log into JapanThe estimated coefficients of the domestic sawmill capacity, both current and lagged, jointly showthat 10% growth of the capacity can eventually contribute to 30% increase of U.S. log imports in Japan. This
contribution is ten times larger than that for the domestic log. This rate is almost the same as the above
structural model. Governmental subsidy to make large-scale sawmills must lead to the demand for U.S. logs
significantly. The coefficient for the timber harvest in U.S. reveals that the log export to Japan may reduce
only in 45% of the harvest reduction rate. The time trend coefficient for 1973-89 is negative.

4. Import price of U.S. log in JapanThe estimated coefficients for the sawmill capacity, that is 7.8 and -6.8, current and lagged
respectively show that the growth of sawmill capacity in the long run may lead to rise in the price almost
proportionally. The coefficient of U.S. housing starts is positive that is 0.26, which has a small impact on theprice. The estimated value for timber harvest in U.S., that is -1.29, implies that the timber harvest may
influence the price reversibly but strongly.

5. Equilibrium quantity of the domestically processed lumber
The coefficient for the sawmill capacity indicates that a continuous 10% increase in the sawmill
capacity may contribute to 7.3% increases in the domestically processed lumber supply. The estimated valueof the Japanese housing construction starts with a delay is positive but small contribution. The time trend
coefficient during 1973-89 is positively significant.
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Impacts of the Environmental Conservation Movements in North America on the Japanese Softwood Timber Markets: an Econometric Analysis

6. Price of the domestically processed lumber
The sawmill capacity with a lag has a negative effect on the price. The coefficient indicates that anincrease of 10% in the capacity may lead to 6.3% diminution of the price. The situation of Japanese lumber
industry must be in the increasing returns. The coefficient of the domestic new housing starts reveals that
10% increase in the housing starts may contribute to the price rise of 5.4%. The coefficient of time trend
during 1973-89 is negative but very small.

7. Equilibrium imports of U.S. lumber into JapanThe coefficient of GDPJ with a lag is very large; Japanese GDP growth may lead lumber imports
growth at the three times faster rate. The coefficient of the new housing construction starts with a lag reveals
that 10% increase in U.S. housing starts leads to 7.8% decrease in the lumber export. A decrease of 10% in
the timber harvest in U.S. may induce 12.8% decrease in U.S. lumber exports to Japan. The time trend
coefficient during 1990-93 shows that the lumber imports has shifted downwards since 1990.

8. Import price of U.S. lumber in JapanThe domestic factors of U.S. (housing starts, stumpage price and exchange rate) influence theimport price significantly. Those three coefficients happen to have almost identical values of about 28%. The
coefficient of TT3 is positive.

9. Equilibrium imports of Canadian lumber into JapanThe coefficient of the timber harvest in Canada, that is 2.8, shows that the timber harvest in Canada
may have 2.8 times larger contribution to the lumber export to Japan. If the timber harvest in Canada
decreases due to the environmental consideration, Canadian lumber export to Japan will be diminisheddrastically. U.S. timber harvest may have negatively influenced on the lumber export from Canada to Japanthrough the timber trade between U.S. and Canada. An increase of 10% in U.S. timber harvest leads to 14%
diminution of the lumber export. The estimated coefficient of U.S. housing starts reveals that 10% increase in
U.S. housing starts leads to 6.4% decrease in the lumber export from Canada to Japan.

10. Import price of Canadian lumber in JapanThe Japanese new housing starts with a lag have a positive correlation to the price. The coefficientindicates that an increase of 10% in the housing starts leads to 8.7% rise in the price. The coefficient of TT2
is positive.

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TACHIBANA Satoshi

CONCLUSION
This study has successfully modeled the structure of Japanese softwood timber market including
imports from U.S. and Canada. The estimations enable us to quantify the impacts of exogenous changes on
Japanese timber market, such as more stringent harvesting regulation for the environmental protection.
There are two main important findings noticeable on the supply sides in the model. Firstly, the mostimportant factor in determining the domestic softwood log supply is identified as the forest standing volume.
Hence, the domestic log supply is expected to increase significantly in a near future, since huge but young
Japanese man-made forests are increasing rapidly in standing volume and soon to reach the harvesting ages.
Secondly, the own price elasticity of export supply, both for log and lumber, from U.S. are higher than thoseof the domestic supply in Japan. U.S. timber supply has been more price-driven than that of Japanese forestrelated industry. On the demand sides, the sawmill capacity plays a very important role in log demand,
especially for the logs imported from U.S.
If U.S. curtail timber harvest in Pacific Northwest by 10%, softwood log exports to Japan would
decrease by 4.5% with price increase of 13%, thus without losing revenue but with increasing revenue on thecontrary. The same harvest curtail at the same time leads the lumber export decrease of 13%. This has noeffects on the price, so U.S. would lose revenue due to the curtail in the lumber market. Canada, however,benefits from U.S. timber harvest curtail, since the 10% curtail would induce 14% increase in the export
without price changes. If Canada curtails timber harvest in British Columbia by 10%, their softwood lumber
exports to Japan would decrease by 28% without price change, and thus export value would decrease. The
environmental conservation movements including wild life protection movements have become very popularin U.S. and Canada. Hence the regulation on timber harvesting may result in more than 10% harvesting
reduction. The environment-oriented policy, thus, would affect the Japanese timber market very seriously.

ACKNOWLEDGMENTS
This study was developed from the paper for the 1996 annual meeting of the Society for
Environmental Economics and Policy Studies. I wish to thank the helpful comments at the meeting. This
study is in part due to a Grant-in-Aid for International Scientific Research (No.08041048) from the Ministryof Education, Science, and Culture of Japan, whose chief researcher is Prof. NAGATA, Shin of The
University of Tokyo.

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Impacts of the Environmental Conservation Movements in North America on the Japanese Softwood Timber Markets: an Econometric Analysis
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trade in the Pacific region (1) Softwood lumber exports from U.S. to Japan. Transactions of the 102nd annual meeting of
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revenue and policy implications, J.E.E.M. 29: 197-213.
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John Wiley & Sons, Chichester.
McKillop, W. L. M. (1973) Structural analysis of Japanese-North America trade in forest products, For. Sci. 19 (1): 6374.
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Univ.: 179-191.
TACHIBANA, S. (1997) An analysis on the structure of Japanese softwood timber market: An econometric study, Thebulletin of the Tokyo University Forests 97: 203-298.
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Pacific region (2) Making of an econometric model for coniferous wood trade between Japan and North America.
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For. Sci., 37(5): 1484-1491.
YUKUTAKE, K. (1985) Simulation analysis of log and lumber: Econometric model for Japan. Jpn For. Econ. Soc. The
Current State of Japanese Forestry 4: 1-14.
APPENDIX: The list of the variables<Endogenous variables with units: Data source (b) and (e)>DLi: demand for softwood lumber (i = A: 1000 b.f., C: 1000 b.f., J: m3)
DRi: demand for softwood round log (i = A: 1000 b.f. scribner scale, J: m3)
PLi: real price of softwood lumber (i = A: US $ / 1000 b.f., C: Canadian $ / 1000 b.f., J: Japanese yen / m3)
PRi: real price of softwood round log (i = A: US $ / 1000 b.f. scribner scale, J: Japanese yen / m3)
SLi: supply of softwood lumber (i = A: 1000 b.f., C: 1000 b.f., J: m3)
SRi: supply of softwood round log (i = A: 1000 b.f. scribner scale, J: m3)<Exogenous variables with units>
CJ: real logging wage rate in Japan (yen/day): Data Source (c)CPJ: capacity of sawmills in Japan (kw): (b)DM: 1 in 1973 and '74, and 0 otherwise
GDPJ: real Gross Domestic Product in Japan (billion yen): (a)HSA: new housing starts in U.S. (1000 units): (d)HSJ: new housing construction starts in Japan (units): (b)OTR: imported logs from Russia and other regions (m3)]: (b)R: the exchange rate of U.S. dollar to Japanese yen (yen / US$): (d)STPA: stumpage price of Douglas-fir on National Forest in Pacific Northwest (US$ / 1000 b.f.): (f)− 49−

TACHIBANA Satoshi
TT1: time trend during 1973〜1993; such as 73, 74, ... 92, 93
TT2: time trend from 1973 up to 89; such as 73, 74... 88, 89, 89, 89, 89, 89
TT3: time trend during 1990〜1993; such as 0, 0, ... 0, 1, 2, 3, 4
THA: timber harvest in Pacific Northwest (million b.f. scribner scale): (f)
THC: timber harvest in British Columbia (1000m3): (f)VJ: softwood stand volume in Japan (1000m3): (c)Note: Subscript i indicates that A: Pacific Northwest, C: British Columbia, J: Japan. PRAJ is the real price of imported
softwood log and PLAJ is the imported softwood lumber from U.S. in Japan. PLCJ is the real price of imported softwood
lumber from Canada in Japan. The deflators are the wholesale price index or producers' price index of the corresponding
country. The annual softwood standing volumes in Japan are calculated in the base of the surveys conducted in about 5
year intervals.

Data Sources(a) Annual Report on National Accounts. Japan Economic Planning Agency. 1972-94.
(b) Annual Report of the Japanese Timber Market (Mokuzai Jukyu Hokokusyo). Japan Ministry of Agriculture, Forestry
and Fisheries. 1972-94.
(c) Annual Statistics Survey of Forest and Forestry (Ringyo Tokei Yoran). Japan Forestry Agency. 1973-94.
(d) Economic Statistics Annual of Foreign Countries (Gaikoku Keizai Tokei Nenpo). The Bank of Japan. 1972-94.
(e) Price Indexes Annual. The Bank of Japan. 1972-94.
(f) Production, Price, Employment, and Trade in Northwest Forest Industries. Pacific Northwest Research Station,
USDA, Forest Service. 1972-94.
TACHIBANA, Satoshi (a part-time teacher of Forestry Economics and Forest Resource Science at Takasaki City
University / Assistant Professor of Forest Policy, Graduate School of Agricultural and Life Sciences, The University ofTokyo)− 50−