Emergent Lessons From 

a Century of Experience 

With Pacific Northwest 

Timber Markets 

Richard W. Haynes

United States 

Department of 

Agriculture

Forest Service

Pacific Northwest 

Research Station

General Technical

Report

PNW-GTR-747

April 2008
Author

Richard W. Haynes (now retired) was a research forester, U.S. Department of 

Agriculture, Forest Service, Pacific Northwest Research Station, Forestry Sciences 

Laboratory, P.O. Box 3890, Portland, OR 97208.

The Forest Service of the U.S. Department of Agriculture is dedicated to the principle of 

multiple use management of the Nation’s forest resources for sustained yields of wood, 

water, forage, wildlife, and recreation. Through forestry research, cooperation with the 

States and private forest owners, and management of the National Forests and National 

Grasslands, it strives—as directed by Congress—to provide increasingly greater service to 

a growing Nation.

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Abstract

Haynes, Richard W. 2008. Emergent lessons from a century of experience with 

Pacific Northwest timber markets. Gen. Tech. Rep. PNW-GTR-747. Portland, 

OR: U.S. Department of Agriculture, Forest Service, Pacific Northwest 

Research Station. 45 p.

Timber markets in the United States are areas where timber prices tend to be 

uniform because of the continuous interactions of buyers and sellers. These markets 

are highly competitive, volatile, and change relentlessly. This paper looks at how 

market interactions in the Pacific Northwest have responded to changes in underlying determinants of market behavior and government actions that have influenced 

supply or demand. Several messages emerge from timber markets about price 

reporting and changing definitions of price, long-term price trends, timber as an 

investment, impacts of market intervention, relations among different markets, 

and implications for future stewardship. The enduring message is that landowners 

and managers respond to price signals arising from market interactions, and their 

actions create the forests inherited by future generations.

Keywords: Timber markets, stumpage prices.
Contents

1 Introduction

2 Background

4 Economic Assumptions

6 The Industry

10 Market Messages

10 Reported Stumpage Prices

14 Spatial Variation

17 Long-Term Price Trends

19 Where Market Intervention Has Made a Difference

22 The Relation Between Stumpage and Product Markets

24 Persistence of Price Premiums for Timber Quality

26 Discussion

27 Implications of Competitive Markets

28 Long-Term Price Trends

29 Market Frustrations

30 Implications for Ecosystem Service Markets

31 Conclusion

31 Metric Equivalents

32 Species List

32 References

37 Appendix 1: Long-Term Data Sets

41 Appendix 2: Price Setting in an Economic Context

43 Appendix 3: Rate of Return Data Set
Emergent Lessons From a Century of Experience With Pacific Northwest Timber Markets

Introduction

Timber markets in the United States usually are thought of as areas where timber 

prices tend to be uniform because of the continuous interactions of buyers and 

sellers. These timber markets are powerful institutions and work with nearly invisible structure beyond agreements about terms of trade, including standardization 

of units. Market interactions reveal how prices and quantities respond to changes 

in both the underlying determinants of market behavior and government actions 

that influence supply or demand. Economists often consider prices as a proxy for 

all market activity in those markets that can be assumed to be competitive. In that 

role, prices act as a signal to both producers and consumers about prospective levels of supply and demand. If consumers judge current prices to be high, they may 

reduce purchases. Those same prices seen by producers may lead them to expand 

production of a good. Such interactions among producers and consumers tend to 

reward the most efficient producers and to lower costs to consumers. 

Here, I summarize some of the messages that emerge from nearly a century of 

stumpage price data available for the Pacific Northwest (PNW) (see app. 1 for these 

long-term data sets). This narrative unfolds in several steps. First, I cover some 

background important to the story. The first part of which is a brief review of the 

underlying assumptions that help define some of the economic processes and that 

govern market functions. The second part of the background is a brief overview of 

the forest industry sector with emphasis on the softwood lumber sector. Second, 

I summarize some of the key issues that have emerged from timber markets over 

the past century. These include price reporting and changing definitions of price, 

long-term price trends, timber as an investment, impacts of market intervention, 

relations among different markets both spatial and product, and implications for 

future stewardship. All of these factors provide context for the interpretation of 

price signals currently described by market interactions. It is these signals that will 

help guide land use to its highest and best use and stewardship decisions that will 

shape the forests inherited by future generations. 

Much of the ensuing discussion centers on price data from the PNW because 

as a region it has a relatively long history (within the context of managed forests) of 

information about its competitive stumpage markets. These markets emerged along 

with the industrialization of softwood lumber manufacturing following the Civil 

War and the development of a railroad-based distribution system for sawn wood. 

Softwood lumber production grew rapidly (see fig. 1) in both the Douglas-fir region 

(western Oregon and Washington) of the PNW and the United States as a whole. 

This rapid increase in lumber production stimulated the development of stumpage 

markets along with price reporting, a multitude of participants, and associations 

Timber markets 

are defined by the 

interactions of buyers 

and sellers.
Figure 1—U.S. and Douglas-fir (DF) region lumber production and U.S. lumber consumption.

0

10

20

30

40

50

60

1865187018751880188518901895190019051910191519201925193019351940194519501955196019651970197519801985199019952000

Year

Lumber (

billion board feet)

DF region lumber production U.S. softwood lumber production

U.S. softwood lumber consumption

GENERAL TECHNICAL REPORT PNW-GTR-747

2

who established and monitored standard grades. Much of this had all emerged by 

the early 1900s. The highly volatile stumpage prices shown in figure 2 illustrate the 

competitive nature of these markets suggesting the absence of other pricing models 

representing less competition (e.g., where there might be some degree of collusion 

among buyers and sellers).

Timber markets in the PNW differ from those elsewhere in the United States 

in two important aspects. First, public land makes up nearly half of the timberland. 

In spite of the extent of ownership, the proportion of total harvest from public lands 

has varied as shown in figure 3. But active public timber sales programs have given 

us a wealth of data that can be used to examine a variety of market issues. The 

second aspect is the high proportion of harvest from forest industry timberlands. 

These timberlands provide the resource base for a number of vertically integrated 

forest product firms that produce a wide variety of forest products.

Background

Two areas of background provide context to the discussion. First, several key 

economic assumptions underlie many of the points discussed later. These are assumptions made generally by economists to simplify the complex pattern of events 
Figure 2—Douglas-fir stumpage price, deflated and nominal.

Figure 3—Harvest for the Douglas-fir region, by ownership.

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000

Year

Harvest (million board feet)

Forest industry Other private

National forest Other government

0

100

200

300

400

500

600

1910191519201925193019351940194519501955196019651970197519801985199019952000

Year

Price (dollars/thousan

d

 board feet)

Real (1982$) Nominal

Emergent Lessons From a Century of Experience With Pacific Northwest Timber Markets
GENERAL TECHNICAL REPORT PNW-GTR-747

observed in daily life. Second, a brief history of the development and current 

conditions in the processing industry provides context for how changes in the mix 

of the products can influence stumpage prices. 

Economic Assumptions

Although the idea of a market is among the most basic concepts of economics, its 

precise definition is problematic (Fackler and Goodwin 2001). Economists consider 

markets not so much as a physical place but as something that happens virtually 

as buyers and sellers of a product continually interact. However, the way in which 

price and quantity data are collected often formalizes both temporal and spatial 

specificity. For example, we have since the 1960s reported prices for the PNW 

that represent timber sales data from the 19 national forests composing the PNW 

Region (Region 6) of the Forest Service, U.S. Department of Agriculture (e.g., see 

table 94 in Warren 2006).

Key aspects of markets are the economic processes of supply and demand (see 

app. 2 for a description of price setting and related market constructs). Key also in 

the case of timber markets is the relation between product and factor markets. That 

is, timber along with labor and capital are considered factors in the production of, 

say, lumber or plywood. The simultaneous solution of both markets determines 

factor prices and quantities along with product prices and quantities. 

Economists often assume competitive markets. That is, a market where individual buyers or sellers do not influence the price by their purchases or sales. Four 

conditions generally describe competitive markets. Buyers and sellers have “perfect” knowledge of prices for other transactions and negligible search costs. There 

are a large number of buyers and sellers and they act independently. The product 

is homogenous and divisible. Finally, market entry or exit is easy. Most economic 

texts discuss the acceptance of these conditions and how the robustness of most 

markets suggests that extreme assumptions are not necessary to ensure competitive 

conditions. It is sufficient if traders in a market know of other buyers and sellers 

and if each trader has knowledge of prevailing prices so that at any one time there 

is a recognized single price (sometimes called the law of one price). 

Markets are thought to be promoters of efficiency. That is, prices and responses 

to price signals are key elements in how economic efficiency is developed. If prices 

for something rise, than consumers reduce consumption and vice versa. Producers expecting sustained price increases will seek capital to expand production 

attempting to capitalize on the higher prices. Consumers expecting sustained price 

increases will seek alternatives to substitute for the more expensive product. 
Emergent Lessons From a Century of Experience With Pacific Northwest Timber Markets

There is also uncertainty about the extent that spatially separated regions 

actively compete. This is the essential ingredient of economic models of trade. 

When there is the opportunity for open exchange (trade) among spatially distinct 

producers and consumers, there is parity among prices. This parity is the result of 

market arbitrage where the opportunity for trade among spatially distinct producers 

and consumers ensures a consistency among spatial patterns of prices (see Fackler 

and Goodwin 2001 for a review of spatial price analysis). 

Market arbitrage is a useful construct for understanding timber markets. 

Stumpage used in the manufacture of forest products is produced over an extensive 

spatial area and relatively costly because of its weight to transport. These characteristics like those for other agricultural commodities yield a complex set of spatial 

price linkages, which give insights into the performance of and relations among 

stumpage markets. For example, later we will consider the markets for sawtimber 

and chips in the West. We have detailed data for the softwood sawtimber market 

and only limited data for chip markets. Nevertheless, by knowing that they share 

the same larger market we are able to infer price levels for the chip markets in areas 

where data are limited. This is a powerful tool in developing price proxies where 

we lack market data.

Economic historians like David Fischer (1996) argued that price revolutions 

define or are defined by the rhythms of history. In Fischer’s view, prices are an 

indicator that not only illustrates market behavior but offers general insights into 

otherwise incomparable events. He would look at figure 2 and argue that it illustrates a history of numerous changes in the forest sector. It shows that prices tend 

both to rise overall and to rise in waves reflecting economic and social changes. But 

the record of price changes tells many stories in addition to those about changes in 

underlying determinants of supply and demand. 

Whereas the distinction between real and nominal price changes is often not 

considered by most people, economists assume that individual consumers respond 

only to real changes in prices and are able to discern those from nominal changes.

These real price changes are those in addition to the overall changes in the general 

price level from inflation. For stumpage prices, this means that landowners and 

stumpage buyers can estimate the effects of overall price changes as they consider 

supply and demand forces for timber.

1That is, economists assume that there is no money illusion where producers or consumers 

respond to illusionary changes in nominal prices.
GENERAL TECHNICAL REPORT PNW-GTR-747

The Industry

The forest products industry was among the earliest manufacturing industries 

to evolve in the PNW. The industry was initially based on processing large (oldgrowth) trees located near tidewater into lumber for a variety of markets. It rapidly 

expanded in the 20th century (see fig. 1) with the development of railroads that 

served domestic and export markets and was an early adopter of advanced materials handling and processing technologies. By 1930, mills in the Douglas-fir region 

accounted for a third of all U.S. lumber production. Production was based on large 

relatively clear logs available from private landowners. The main product was 

Douglas-fir (see “Species List” for scientific names) lumber, and it commanded a 

price premium relative to other species because it was relatively knot free. Federal 

logs played a relatively small role because of efforts by the forest industry to restrict 

federal harvests in order to improve stumpage prices and forest management on 

private timberlands (see Mason 1969 for details). 

However, public harvests rapidly increased following World War II as softwood 

lumber demand reached new heights and private timber supplies started to decline. 

From the late 1940s until the late 1980s, timber harvest in the Douglas-fir region 

increased by roughly 25 percent, fueled mostly by a surge in harvesting on public 

lands (see fig. 3) (Adams et al. 2006). Between 1945 and 1965, timber harvest on 

Forest Service land in the western forests of Oregon and Washington rose from 

about 149 million cubic feet (745 million board feet) to 807 million cubic feet (4,035 

million board feet). 

During the last 60 years, the industry diversified (see fig. 4) to include the 

production of a variety of products based both on roundwood harvest from the 

region’s forest as well as products (like paper) based on the residues from primary 

production. Stumpage used for lumber production fell from 76 percent in 1950 to 

38 percent in 1979. The impact of this fall in saw-log demand on stumpage prices 

was muted by the increase in log exports that helped maintain harvest of saw logs. 

The log export trade grew rapidly (see fig. 4) as economic growth in Pacific Rim 

countries provided expanding markets for U.S. timber. During the 1970s and 1980s, 

log exports on average accounted for roughly 20 percent of timber harvested, and 

both the domestic and export markets contributed to wide price swings in stumpage 

markets. 

The rise and fall of the log export market would play a particularly important 

role in the management of the region’s private timberlands and for state lands in 

Washington (from which logs were exportable until the 1990s). Export markets 
Figure 4—Proportion of Douglas-fir region softwood harvest by product category.

0

500

1,000

1,500

2,000

2,500

3,000

1950 1960 1970 1979 1990 1996 2002

Year

Harvest (million cubic feet)

Other uses

Log exports

Pulpwood

Plywood

Lumber

Emergent Lessons From a Century of Experience With Pacific Northwest Timber Markets

favored larger, older, high-quality trees. By the mid 1980s, old growth on private 

timberlands was largely exhausted (see Haynes 1986), and log exports came from 

older second-growth stands that were established following the early industrial 

harvests. The higher log export prices provided an incentive for some private 

landowners to manage for longer rotations. This had the ancillary ecological benefit 

of increasing the proportion of mature forests (older than 60 years) on some private 

lands, particularly nonindustrial private forest lands. By the early 1980s, effectively 

all of the old-growth forests on industrial private land and most of the old-growth 

on nonindustrial private forest land had already been harvested (Haynes 1986). 

In fact, the proportion of the private inventory composed of trees >160 years old 

dropped from 15 to less than 1 percent during the 1970s and 1980s (Barbour 

et al. 2006). 

The determinants of the industry’s expansion were processing improvements, 

expansion of Pacific Rim markets for softwood logs, and growth in domestic 

markets. The rapid growth in harvests and competition among markets led to rapid 

rises in stumpage prices (see fig. 2) and to bans on exporting federal logs without 

further processing. By the late 1980s, the industry was bifurcated with a rapidly 

growing segment of highly efficient mills that cut roughly uniform log mixes of 

mostly second-growth private timber for commodity markets. Another segment 

included a number of older and somewhat less efficient mills that processed larger 

2 For Douglas-fir, this is usually seen as a mix of stem straightness, cylindrical boles, relatively 

small infrequent branches (or no branches in older trees), and high stiffness compared to 

other softwoods.

The diversity of 

manufacturing in the 

PNW has declined 

since 1990.
GENERAL TECHNICAL REPORT PNW-GTR-747

8

(and older) log mixes mostly from public timberlands for a range of markets including high-quality domestic and export markets. The design of the older mills made 

them difficult to adapt to major changes that would soon shape the industry. 

The landmark changes started in 1991 with injunctions on the sale of federal 

timber that were resolved with the implementation of the Northwest Forest Plan 

(NWFP) (USDA and USDI 1994). The reductions in federal sales caused wood 

supplies to fall below existing processing capacity and led to mill closures, especially those dependent on federal timber, as many could not efficiently process 

smaller logs (less than 20 inches) available from private landowners. Demand for 

log exports also fell as the Japanese economy and then other Asian economies 

collapsed (Daniels 2005). There have been painful adjustments in the PNW. United 

States consumers saw little change as the harvest decline (roughly 5 billion board 

feet) was offset by a combination of factors including harvest increases on private 

timberlands, increases in harvest in other regions, particularly the U.S. South and 

the interior Canadian Provinces. Prices did spike upward in 1993 (see Sohngen 

and Haynes 1994) causing some market dislocation and speeding the adoption of 

engineered wood products in place of some solid wood products. In addition, the 

collapse of the log export market from PNW led timber managers and landowners 

to shift formerly exported logs (annually, more than 2 billion board feet, log scale) 

to the domestic market helping the timber industry to adapt to reduced federal 

harvest flows (see Haynes 2003 for a general discussion).

The timber industry in the Douglas-fir region restructured during the 1990s, 

evolving into a highly efficient but less product-diverse industry, focusing on 

lumber production from 14- to 20-inch logs primarily for the domestic market 

and using timber from private timberlands (see Barbour et al. 2003, Haynes and 

Fight 2004). By one measure, the product diversity increased from 1950 to 1979 

by 16 percent but by 2002 fell back to levels nearly the same as in 1950. Much of 

this change is attributable to the decrease in the proportion of logs being used for 

lumber production, as both plywood production and log exports increased until the 

1990s and then fell as proportion of wood used for lumber rebounded to near the 

1960 levels (see fig. 4).

3These shifts validated the warnings of those who said that federal protection for the northern 

spotted owl (Strix occidentalis caurina) would shift the environmental consequences elsewhere. Economists call these types of effects “unintended consequences” and often argue 

that they demonstrate policy failures in the sense of not having considered the full range of 

possible effects.

4This was computed by using the Shannon Weaver diversity index and the data from figure 4. 

The region’s product diversity peaked in 1990.
Emergent Lessons From a Century of Experience With Pacific Northwest Timber Markets

The loss of product diversity described earlier has implications for stumpage 

prices. Earlier studies of bidding (see Haynes 1980) found that higher bid prices for 

stumpage were often associated with a larger number of bidders who represented 

a wider range of forest products and markets. The proposition was that the greater 

the diversity of products produced the higher was the likelihood of some bidder 

being willing to bid more given their unique products. The opposite argument, and 

perhaps what we are seeing now, is that if most producers produce nearly the same 

thing, (such as commodity grades of softwood lumber) then there are fewer opportunities for unique market niches and consequently lower overall stumpage prices.

The sawmills, themselves, have changed rapidly. Currently there is little capacity capable of handling logs over 24 inches in diameter, but there is an evolving 

small-log industry using logs between 4.5 and 10 inches small-end diameter. Mills 

themselves are changing with the development of both very large mills (producing 

300,000 to 400,000 board feet per shift) and specialty mills, some of which are 

relatively small (less than 50,000 board feet per shift). It is still a large industry. In 

2002, 13.44 billion board feet of lumber was produced in Washington, Oregon, and 

California requiring 1.68 billion cubic feet of logs or 1.4 million truckloads. The 

surviving and new mills are in locations along main transportation corridors and 

close to private timberlands. Now some rural areas formerly thought of as timber 

dependent have little local forest products manufacturing, and logs harvested in the 

area are shipped to manufacturing centers further away resulting in slightly lower 

stumpage prices than in the past and reduced employment in spite of relatively 

high harvests. 

The softwood lumber industry is characterized as being highly competitive. 

Evidence of this included the widespread use of a simple national price for softwood lumber in various statistical reports. Support for this assertion is also the 

relatively low degree of concentration of production among the largest producers. In 

2006, the four largest companies in North America accounted for 25 percent of all 

softwood lumber production manufactured at 91 mills. The next four largest firms 

added another 11 percent of lumber production manufactured at 60 mills. Other 

evidence includes what is essentially a single national price for commodity grades 

of lumber. 

Changes in product markets during the 1990s contributed to highly volatile 

stumpage markets as landowners and forest products producers adjusted to the 

reductions in federal timber flows (see Warren 2004, for various data series, and 

Haynes et al. 2007 for a discussion of regional and national market adjustments). 

5This was computed from lumber production data reported in Random Lengths Yardstick 

(2007).
GENERAL TECHNICAL REPORT PNW-GTR-747

10

Since the mid 1990s, stumpage prices have been stable or declining (recall fig. 2), 

suggesting lower financial returns to various forestry practices. These lower prices 

together with the loss of the export price premium have reduced the price expectations of landowners and may threaten commitments to sustainable forest management by some landowners. These relatively weak stumpage prices are leading to a 

shift toward forest management regimes that favor shorter rotations (Haynes 2005). 

Today the economic incentive for all private landowners is to grow smaller, more 

uniform trees. One consequence of this is a divergence between ecological conditions on public and private timberland (see fig. 70 in Haynes 2003 and a discussion 

of ecological consequences in Spies 2006). 

Market Messages 

Stumpage markets in the Douglas-fir region have operated over the past century 

as unregulated entities and, other than for some common scaling rules, operate 

without oversight. These are competitive markets and as such can be used to 

illustrate a wide range of economic issues including price reporting, spatial 

price variation, long-term price trends, the effects of different types of market 

intervention, persistence of price premiums reflecting higher quality, and the 

relation of stumpage and product markets. The robustness of this market can be 

used to illustrate other economic circumstances. For example, from the 1960s to 

the 1990s, the log export restrictions on federal logs resulted in dual markets for 

domestic and export logs. Since the collapse of the export markets in the late 

1990s, export prices have adjusted to those in domestic markets. Another example 

is the extensive insights about how bidders respond to different sale characteristics 

and changes in sales practices (e.g., Haynes 1980, Mead 1966). These insights 

were developed using the extensive data sets of federal timber sales that included 

appraisal data, bidding data, and some information about those bidding for 

federal timber. 

Reported Stumpage Prices

In most markets, the multiplicity of buyers, sellers, and transactions obscure prices 

and threaten the one-price condition necessary to ensure competitive markets. 

Various institutions with a vested interested in ensuring competitive markets often 

step in by providing price reporting to help inform both buyers and sellers. In the 

United States, there are two conventions for reporting stumpage prices. First, there 

is reporting of actual transaction prices based on actual stumpage sales that often 

6Some observe that the export market may not have been as competitive as the domestic 

market as it was dominated at times by a few large exporters or trading firms.

Timber markets have 

operated for the past 

century with little 

regulatory oversight.
Table 1—Construction of volume-weighted stumpage 

price, Northern Region, 2004 

Species Value Volume

Volume 

weight

Dollars/thousand

board feet

Thousand

board feet Percent

Cedar 169.78 2,773 1.8

Douglas-fir 172.09 58,845 38.4

Engelmann spruce 204.05 5,264 3.4

Larch 146.44 13,548 8.8

Lodgepole pine 163.91 28,845 18.8

Ponderosa pine 126.71 1,987 1.3

True fir 121.25 39,044 25.5

Western hemlock 113.45 309 .2

Western white pine 129.60 2,723 1.8

 All species 154.93 153,338

Emergent Lessons From a Century of Experience With Pacific Northwest Timber Markets

11

use some sort of bidding process. The reported prices are volume-weighted averages of the species or species groups offered for sale. That is, they are the average 

of the species making up the sales offered in a particular location during a given 

period. The weights are the volume proportions for each species. Consider the 

example in table 1. These are prices for sawtimber sold on the national forests in 

the Northern Region (Region 1) during 2004. The values and volumes are annual 

data reflecting prices and sales volumes reported by quarter (see table 80 in Warren 

2006 for the actual data) where the quarterly variation in 2004 was from $146 to 

$221. The right-most column shows the volume weights and suggests that the prices 

for Douglas-fir and true fir will largely determine the regional price.

The use of transaction data from Forest Service sales has led to two measures 

of stumpage prices. The most widely reported stumpage prices are the prices bid 

for USDA Forest Service timber sales. These prices have been published quarterly 

since 1963 for broad areas and are generally cited as “sold” or “bid” prices. They 
GENERAL TECHNICAL REPORT PNW-GTR-747

12

represent the high bid for timber sales. The other measure is the price paid for 

timber harvested from Forest Service sales. This price is called the “cut” or “harvest” price and for an individual sale is the adjusted high-bid price

 when logs are 

scaled after harvest. The cut price series is available only as an all-species average, 

whereas sold prices are available for both principal species and all-species averages. 

In both cases, the averages are most commonly reported as volume weighted as 

illustrated in table 1.

The drawback to the use of Forest Service sales data is that it is for a fairly 

generic mix of log grades that have changed in definition over the past century. 

Although individual bidders do adjust their bids to reflect their perceptions of 

sale quality (based on species and differences in log grades, see Haynes 1980 for 

details), there is no way to adjust sale prices over time for changes in the quality of 

logs being sold. One concern is the extent Forest Service prices represent market 

prices. For the Douglas-fir region, Adams and Haynes (1989) found that harvest 

(cut) prices were representative of market prices in the post-World War II period. 

During that period, however, the Forest Service sold mostly old-growth and mature 

timber while private landowners increasingly sold younger and smaller sawtimber 

(see table 14 in Haynes 2005 to assess this trend). Since the reduction of federal 

harvest because of the Northwest Forest Plan, the Forest Service has sold mostly 

younger timber from either thinning or hazardous fuel reduction activities and the 

associated lower sale prices reflect this lower quality relative to stumpage available 

from private timberlands. This concern will be examined in more detail in a 

later section. 

The second type of stumpage prices are list prices. This type of price is collected from various log buyers at specific points in time by a reporting service that 

then reports averages being paid in a selected region for specific log mixes. In the 

PNW, Log Lines (2000-2004) is an example of this type of price reporting. In that 

case, the reported prices are actually prices of logs delivered to mills so that they 

include both stumpage and logging costs. Another example of delivered log values 

used in the PNW are log export prices, which are derived from the customs forms 

filed with the customs districts where the exporting takes place. 

Stumpage prices are usually reported in nominal terms and by convention 

are not seasonally adjusted. Until the early 1980s, nominal prices were the most 

frequently used to assess market conditions including price forecasting. The 

7Most Forest Service timber sale contacts being offered in the West include provisions for 

adjusting the stumpage rates actually paid by purchasers because of changes in product selling 

values. This process is termed “stumpage rate adjustment” or “price escalation.” The adoption 

of “stumpage rate adjustment” provisions varied over time, leading to some distortions in the 

relation of sold and cut prices when comparing stumpage prices among regions.
Figure 5—Stumpage price seasonal adjustments (1987).

0

10

20

30

40

50

60

January

February

Marc

h

April

Ma

y

June

July

August

September

October 

NovemberDecember

Price (1967 dollars/

thousand board feet)

Unadjusted

Adjusted

Month

Emergent Lessons From a Century of Experience With Pacific Northwest Timber Markets

13

disparity, however, in implications for long-term price trends between nominal 

and real prices demonstrated the need to consider both series. For example, for the 

period 1950-1975, the nominal price trends suggested that stumpage prices were 

increasing at 6.4 percent per year. At that rate, we expect stumpage prices to double 

every 11.25 years. However, adjusting for inflation (and looking only at the real 

rates of increase) the real rate of increase was 4.3 percent per year during this 25-

year period. At this rate, prices double every 16.75 years. The difference between 

the two trends suggests the need for caution to avoid spurious recommendations 

based solely on perceived changes in the nominal prices. 

Seasonal patterns do exist in stumpage markets, especially in monthly data 

where there is greater volatility in prices owing to cyclic trends in the market 

(Haynes 1991). Figure 5 illustrates a comparison of monthly prices both adjusted 

and unadjusted. Most of volatility in the series seems to be due to cyclic trends in 

the market. In this case the unadjusted data are still a robust representation of 

the value of timber, but some caution is needed to acknowledge the extent of 

seasonal variation.

The monthly data do not display any greater seasonality than do the quarterly 

stumpage prices traditionally used to describe stumpage markets. For quarterly 

data, seasonal adjustments for the period 1975-1989 averaged 1.06, 0.98, 0.92, and 

1.04 for the first, second, third, and fourth quarters, respectively. That is, on average, prices, in the first quarter (winter) averaged 6 percent higher than the annual 

average and 15 percent higher than prices in the third quarter (summer). The higher 
GENERAL TECHNICAL REPORT PNW-GTR-747

14

prices in late fall and winter (fourth and first quarters) reflect the closure of higher 

elevation logging sites and reduced timber sale offerings. Although the estimates 

of seasonality suggest the need for some cautions about intra-annual comparisons, 

custom condones the use of unadjusted price series.

Figures 6a and 6b illustrate several general issues that provide context for the 

discussion in this section. Figure 6a, for example, shows saw-log prices for three 

softwood species sold in widely dispersed markets. There is a relatively high degree 

of correlation among the species. There are also persistent regional differences that 

reflect differences in logging and manufacturing costs, and in the case of Douglasfir, some of the higher prices until the late 1980s were because of price premiums 

enjoyed by Douglas-fir lumber (see Haynes et al. 1988). That these widely dispersed 

markets vary in tandem responding to the same economic stimulus demonstrates 

their competitiveness. The relative positions of the prices illustrate the substitutability of the species for each other in many end uses.

To be useful, factor prices like stumpage should track changes in end product 

markets. That is, sawtimber stumpage prices should mirror what is happening in, 

say, lumber markets. In case of competitive markets, these prices should also reflect 

major exogenous changes in the stumpage markets. For example, the reduction in 

federal harvest in the PNW following the implementation of the NWFP (USDA 

and USDI 1994) reduced the total stumpage supply function inducing changes as 

competitive pressures forced adjustments in lumber production. These competitive pressures evolve over several years. They start as rising stumpage prices 

increase manufacturing costs and reduce profitability. Reduced profitability leads 

to production cutbacks as manufacturers attempt to balance production with sales. 

This adjustment process continues until lower production levels lead to a balance 

between the supply and demand and more stable prices. This process is illustrated 

in figure 6a where there are rapid stumpage price increases (following the harvest 

reductions on federal lands in the early 1990s) followed by a decrease in prices as 

production adjusts downward and prices between regions are more aligned (for the 

example, the prices for Douglas-fir and southern pine 2000-2004).

Spatial Variation

There is considerable spatial variation in stumpage prices. As an example, consider 

average stumpage prices for each of the nine contiguous national forests that line 

the Cascade Mountains in Washington and Oregon. These average prices are shown 

in figure 7 for the forests aligned from north to south. There are several reasons 

often cited to explain these differences including differences in species, stand 

volumes, local processing opportunities, amount of private timber available for 
Figure 6a—Stumpage prices for Douglas-fir, ponderosa pine, and southern pine.

Figure 6b—Stumpage prices for Douglas-fir, ponderosa pine, southern pine, Northeast softwood, and 

Northeast hardwood.

0

100

200

300

400

500

600

196019651970197519801985199019952000

Year

Stumpage price

 (1982 dollars/thousand 

board feet) Douglas-fir Southern pine Ponderosa pine

Northeast hardwood Northeast softwood

0

100

200

300

400

500

600

1910191519201925193019351940194519501955196019651970197519801985199019952000

Year

Stumpage price

 (1982 dollars/tho

usand 

board feet)

Douglas-fir Southern pine Ponderosa pine

Emergent Lessons From a Century of Experience With Pacific Northwest Timber Markets

15

harvest, access (specifically the costs to build or rebuild roads), and localized differences in sale preparation and administration. Even controlling for these factors, we 

would expect to see differences in stumpage prices that reflect the spatial dispersion 

of timber supplies from available processing centers. These local differences would 

be explained by differences in transportation costs from the location of production 

(in the case of forests—the stand) to the point of processing. This is the classic case 

of site prices described by Bressler and King (1970) and shown in figure 8. Here the 

B

A
Figure 7—Stumpage price for timber harvested from the national forests of the Pacific Northwest-west.

Figure 8—Relation of stumpage prices and distance to processing centers.

0

100

200

300

400

500

600

Mount

BakerSnoqualmie

Olympic

Gifford

Pinchot

Mount Hood

Willamette

Umpqua

Rogue River

Siuslaw

Siskiyou

Average

Forest

Harvest price

 (dollars/thousand board feet)

1973-1980 1981-1990 1991-2000 2001-2004

dx1

dy3

Price at 

forest x Price at 

forest y

Processing 

center 1

Processing

center 2

Distance

Price paid

GENERAL TECHNICAL REPORT PNW-GTR-747

16

difference in prices between forest x and y (Px - P

y) would be equal to the additional transport cost ([dy3 - dx1

] x cost [usually expressed on a per-mile basis]). If prices 

in the second processing center were to increase to equal those in the first processing center, timber prices on forest y would be greater by the difference between the 

price line for processing center 1 and the upward revised price line from processing 

center 2. 
0

50

100

150

200

250

1960 1965 1970 1975 1980 1985 1990 1995 2000

Year

Stumpage 

price (1982 

dollars/thousand

board feet)

0

5

10

15

Pulp price (1982 

dollars/cord)

Hardwood sawtimber Softwood sawtimber

Hardwood pulp Softwood pulp

Figure 9—Northeastern sawtimber stumpage and pulp prices. 

Emergent Lessons From a Century of Experience With Pacific Northwest Timber Markets

17

Market arbitrage limits the difference between stumpage prices. For example 

the stumpage prices of the nine nearly contiguous national forests aligned along the 

Coast and Cascades Range in Washington and Oregon ranged in 1993 from $164 to 

$411 per thousand board feet. The average price was $348 per thousand board feet. 

Figure 7 illustrates that being close to the major softwood lumber manufacturing 

facilities in the Willamette Valley, especially its southern end, increases prices 

for the local national forests (Willamette, Umpqua, and Sisuslaw). That pattern is 

relatively consistent over the past four decades, but there are differences in earlier 

periods when the forests adjacent to the Columbia River offered attractive markets 

(like the situation shown in fig. 8).

Long-Term Price Trends

The underlying data shown in figures 6 and 9 are being used by various investors

and land management organizations to demonstrate the attractiveness of timberland 

investments. As investments, timberlands complement stock and other financial instruments, but the tendency of stock portfolios to drop as well as changes in the tax 

laws have made timberland attractive to large institutional investors (see Hancock 

Timber Resource Group 2003, Thompson 1997). The rates of return for timberland 

investments are often higher than for alternative investments, but the volatility in 

prices gives timber a higher variability. Thompson (1997) found that holding a fixed 

10-percent of a portfolio in timber showed about a 1-percent higher rate of return 

with no increase in risk compared to portfolios with no timber.

8Including timber investment management organizations (TIMOs). 

Stumpage prices 

have experienced real 

price increases for 

the last century.
GENERAL TECHNICAL REPORT PNW-GTR-747

18

Figures 6a and 6b show a history of change. These series illustrate that 

stumpage prices tend to rise overall and that much of the increase typically comes 

in waves consistent with structural shifts in underlying markets. These series 

illustrate long-term real increases of 2.7 percent per year for Douglas-fir and 3.0 

percent per year for southern pine. For the past 50 years, these rates are 3.5 percent 

per year and 1.3 percent per year, respectively. The average deviation from the 

trends for each decade until the 1950s was 2 to 11 percent for Douglas-fir and 5 to 

14 percent for southern pine. In the last six decades this deviation has been larger as 

shown in the following tabulation.

Average deviation by decade from 

trend prices

Year Douglas-fir Southern pine

Percent

1950 12 45

1960 17 17

1970 25 37

1980 37 37

1990 106 36

Until the 1990s, there was always greater variation in the South than in the 

West, but the greater volatility since 1950 reflects a period when timber demands 

rose faster than supplies and regional production shifted first to the West and then 

back to the South (see the Resource Planning Act timber assessments for a discussion of these changes [Haynes and Adams 2007]). 

Table 2 presents rates of price appreciation for the series shown in figures 6 and 

9. All of these figures are real rates of price appreciation and demonstrate that, in 

addition to the price volatility discussed earlier, there are significant long-term real 

price increases. At the same time, however, the changes in timber markets in the 

1990s have fundamentally altered these long-term price trends, and recent stumpage price projections (Haynes et al. 2007) suggest only modest growth for the next 

five decades. These more modest price increases raise concerns about the prospects 

for sustainable forest management where the adoption of management practices by 

some owners depend on continuously rising prices (see Haynes 2007 for a more 

detailed discussion). 

9These are computed from the coefficient A2 estimated from the following regression: 

ln (price) = A1 + A2 x time.
Table 2—Rates of real price appreciation for stumpage

Sawtimber

Years Douglas-fir Ponderosa pine Southern pine 

Percent

1910-2004 2.6 3.3 2.9

1910-1990 2.4 4.0 3.3

1991-2004 -6.7 -13.3 0.0

Northeast

Hardwood 

sawtimber

Hardwood 

pulpwood

Softwood 

sawtimber

Softwood 

pulpwood

Percent

1961-2002 4.6 0.5 1.3 0.7

1961-1990 4.5 .9 .8 0.0

1991-2002 3.8 0.0 3.9 0.0

Emergent Lessons From a Century of Experience With Pacific Northwest Timber Markets

19

From an economic perspective, the general history of rising prices (as shown in 

figs. 6 and 9) suggests that timber is relatively scarce and, all else being equal, that 

there should be changes in various market factors to alleviate the price increases. 

This behavior is expected as these are relatively efficient (free) markets comprising 

numerous producers and consumers making decisions based on available information. The history of rising prices should also encourage consumers to substitute 

nonwood material in some uses, such as residential construction (e.g., steel studs 

for framing), if the real prices of the substitute are less (or more stable) than wood 

prices. These rising stumpage prices have encouraged increased efficiency and 

diversity in the mix of forest products as both producers and timberland owners 

looked for ways to increase returns. Rising prices should also encourage landowners and managers to increase the intensity or extent of land management to 

produce more timber (to the point where expected timber prices become stable).

Where Market Intervention Has Made a Difference

There are two examples where different types of market intervention have made a 

difference in stumpage prices. The first of these is the example of log exports. The 

volumes of logs exported from the four west coast customs districts are shown in 

figure 10. The sudden apparent increase in log exports (see Daniels 2005, Darr et 

al. 1980 for a brief history) in the mid 1960s led to restrictions being placed on log 

exports from federal lands starting in 1968. 
Figure 10—Volume of log exports from the west coast and Alaska.

0.0

0.5

1.0

1.5

2.0

2.5

1960 1965 1970 1975 1980 1985 1990 1995 2000 2005

Volume (billion board feet)

Alaska California Oregon Washington

Year

GENERAL TECHNICAL REPORT PNW-GTR-747

20

The expected market responses can be described using conventional economic 

representations as described in appendix 2. In an economic context, log export restrictions on federal timber reduce overall supply available to the export market and 

raise stumpage prices for all participants. But in this case it also produces higher 

prices for owners whose stumpage is exportable and lower prices for owners whose 

stumpage is limited to the domestic market. This market intervention results in a bifurcated market, and although prices for federal timber are higher than they would 

be without the opportunity for trade, they are less than they would be in a free 

market. This intervention also results in higher prices for logs that can be exported 

leading to windfall gains to some landowners. The difference between prices in the 

two markets became known as the export premium and was contentious in debates 

both about export policies and eventually about changes in federal timber flows in 

the early 1990s. 

Part of the controversy was the extent that export price premiums could be verified from existing data. Confounding this problem was that log exports were subject 

to some postharvest handling (extra sorting for the various export markets) and 

were reported from customs data as values along ship side (f.a.s.) reflecting stumpage, logging, and these additional handling costs. One way to approximate these 

premiums in the stumpage market is to compare prices for stumpage from national 

forests and state forests in western Washington. The Washington Department of 

Natural Resources (DNR) was active in the log export markets until the early 1990s 
0

100

200

300

400

500

600

700

1965 1970 1975 1980 1985 1990 1995 2000

Year

Stumpage pric

e

(d

ollars/thousand board feet)

National forest State

Figure 11—Average stumpage price for national forest and state lands in western Washington.

Emergent Lessons From a Century of Experience With Pacific Northwest Timber Markets

21

but sold stumpage roughly similar in quality and using administrative procedures 

similar to those of national forests.10 The prices shown in figure 11 illustrate a 

persistent price difference (1968-1992) that averaged $72 per thousand board feet. 

A second example of market intervention that led to price differences was the small 

business administration (SBA) set-aside program applied to Forest Service sales. 

The SBA set-aside program was implemented in the early 1960s in an attempt to 

ensure that a set percentage (based on historical volumes) of timber sold by the 

Forest Service went to small businesses (defined as being less than 500 employees). 

Figure 12 shows the proportion of volume that actually was restricted for sale only 

to eligible small businesses. For a decade (the early 1970s to 1980s) about 25 percent of the timber sales were restricted to small businesses. In earlier work (1979, 

1980), I found that the sales prices for set-aside sales were less than what might be 

expected for timber sales of that size and quality. At that time, I said that “lower 

prices for sales of at least equal profitability are symptomatic of restricted competition ... (and) an implicit subsidy to those firms winning set-aside sales” (Haynes 

1979: 283). 

There is a shorter record of published price data to illustrate this (from 1986 to 

current), but the data for 1986-1990 suggest that set-aside sales average 2 percent 

10The price differences between national forest and state forests in western Washington after 

1992 represent differences in timber qualities. These differences are discussed in a later section.
0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

19601962196419661968197019721974197619781980198219841986198819901992199419961998200020022004

Year

Volume

 (million board feet)

Set aside Region 6

Figure 12—Pacific Northwest national forest timber volume sold for set-aside sales and total Pacific 

Northwest Region (Region 6).

GENERAL TECHNICAL REPORT PNW-GTR-747

22

less than all sales in Region 6. Data for 1975-1978 show a difference between setaside and open sales for the west-side forests of 6 percent (Haynes 1980).

Both of these cases illustrate the workings of a competitive market in the sense 

that interventions from either the demand or supply side of the market had predictable outcomes. Both also represent relatively common types of market interventions 

undertaken for specific reasons but without much consideration of their widespread 

effects. For example, log export restrictions were initially debated in terms of 

their employment effects and not their price impacts. When price impacts entered 

into the debate, they were mostly considered in terms of reductions in returns to 

landowners and only recently in terms of the positive impacts they might have had 

on land stewardship. That is, higher prices for larger logs provide incentives for 

management practices that produce these logs.

The Relation Between Stumpage and Product Markets

Price markup rules—

There has been a long-standing interest in trying to assess conditions in the 

stumpage market by observing changes in the lumber market. In essence this leads 

to the relation:

Pa = A + BPx
Emergent Lessons From a Century of Experience With Pacific Northwest Timber Markets

23

Where

Pa is the stumpage price (log scale),

A and B are estimated coefficients, and

Px is the price for softwood lumber (lumber scale). 

Both Pa and Px are for the same general species groups. This relation is the 

conceptual basis behind the residual value appraisal system used by the Forest 

Service during the late 20th century. The Forest Service is required by law to 

appraise timber at the “fair market value,” and this was seen as providing such an 

estimate. It was also the basis for considering the stumpage market price effects 

associated with forest policy discussions, which was common until the mid 1970s. 

Spelter (2005) recently examined the use of price markup rules to establish estimates of stumpage values that investors could use as a benchmark and as useful 

leading indicators of reported market directions. 

Within the economics literature (see George and King 1971) these are called 

price markup rules and were originally used to explore the product/factor market 

relations and how changes in, say, product prices would be transmitted to factor prices. In general, these relations were described as being one of three forms 

depending on the nature of prices in one market level relative to the other: a fixed 

markup, a proportional markup, or a combination of the two. These relations can be 

used to describe the ability to pass through changes in input costs to product prices, 

or its inverse, the ability to impose changes in product prices on input. This ability 

is called the elasticity of price transmission and ranges in forest markets depending 

on species and regions from 0.30 to 0.64 (Haynes 1977, Spelter 2005). 

Using the data (for 1910-2002) shown in figure 2, we can estimate the price 

markup relation for Douglas-fir. Both the intercept and slope coefficients are significant suggesting that this combines both the fixed and variable markup relations (it 

is a proportional markup). The relation is:

Pdf = -54.85 + 0.71 Plp

Where Pdf = stumpage price for Douglas-fir and Plp = price for Douglas-fir lumber.

My original work on price markup rules was intended to disentangle the way 

in which stumpage prices had been estimated in the 1973 Outlook study (USDA FS 

1973). There the authors of the Outlook study had assumed that an average of about 

75 percent of future increases in forest product prices would go to stumpage. The 

remaining 25 percent of product price increases would be available to cover higher 
GENERAL TECHNICAL REPORT PNW-GTR-747

24

costs of harvesting and manufacture (USDA FS 1973: 149). With estimates of the 

elasticity of price transmission of, say, 0.45, the actual increase in stumpage price 

would be about 45 percent, considerably less than what was being estimated by the 

Forest Service.

This relation and the elasticity of price transmission that can be computed from 

its coefficients also can be used to describe the relation between product and factor 

(input) demand functions. If we assume that the product production functions are 

fixed factors, then we can compute the elasticity in the factor demand market as the 

product of the elasticity in the product market and the elasticity of price transmission (see Haynes 1977). This approach provides a useful way to relate short-term 

changes in stumpage markets to changes in product markets. 

Speed of market adjustments—

Another past concern has been the speed that prices adjust to changes in market 

conditions. For example, how fast do we see increases in stumpage prices when 

single-family housing starts (reported monthly) suddenly increase? In this case, the 

market impact traces from observed increases in reported housing starts (a leading 

indicator of economic activity) to increases in lumber demand and lumber prices 

to increases in stumpage prices all reflecting increases in demand for housing. 

Past research suggests that stumpage prices adjust within 1 to 2 months of changes 

in product markets and that product markets adjust within a month of changes in 

underlying market determinants. 

There are implications for price reporting in this discussion of how fast prices 

express market changes. As the adjustment takes place within 1 to 2 months, it is 

common to use quarterly data as the finest practical resolution for price reporting 

(e.g., see Warren 2006, Timber Mart-South 2000-2004, Log Lines 2000-2004). This 

assumes that quarterly prices represent average market conditions in both markets 

that have adjusted to market signals within the same quarter.

There are also some implications for those who wonder why product and 

stumpage markets don’t display the same variation. First, figures like figure 3 

display annual data that obscures the speed of various market adjustments. Second, 

given the discussion about the elasticity of price transmission, the differences in 

elasticities between the product and stumpage markets suggest that price changes in 

the stumpage markets will be greater than those in the product market. 

Persistence of Price Premiums for Timber Quality 

In addition to the log export price premiums and the persistent differences among 

species prices, another type of price premiums are those paid for stumpage that 

will produce a higher proportion of higher grade lumber. Figures 13a and 13b for 
Figure 13—Douglas-fir (a) and coast hem-fir (b) lumber price ratios for grade groups.

0

1

2

3

4

5

6

7

1970 1975 1980 1985 1990 1995 2000 2005

Price ratio

High/medium High/low Medium/low

0

1

2

3

4

5

6

7

1970 1975 1980 1985 1990 1995 2000 2005

Price ratio

Year

Emergent Lessons From a Century of Experience With Pacific Northwest Timber Markets

25

Douglas-fir and coast hem-fir of high-to-low or high-to-medium grades of lumber 

show how price premiums have persisted over the past 35 years. Persistent higher 

prices for higher grades have been used by advocates of alternative management 

regimes to argue for high-quality forestry (Barbour et al. 2003, Waggener and Fight 

1999, Weigand et al. 1994). The heart of their argument is that management actions 

that lead to higher quality saw logs that produce a higher proportion of high-grade 

lumber increase returns to land management. The various management actions 

involved in high-quality forestry include thinning and pruning strategies and longer 

rotations coupled with more frequent thinning. 

In an earlier paper (Haynes 2005), I estimated that for Douglas-fir, increasing 

rotation length from 40 to 160 years would increase stumpage value by roughly 5 

A

B
GENERAL TECHNICAL REPORT PNW-GTR-747

26

percent because of increased recovery of higher grades of lumber. This is smaller 

than the large differences cited by proponents of longer rotation who often look at 

only differences in lumber prices without considering the relation among stumpage 

and lumber prices (see the section on the price markup rules for more details).

Another illustration of how timber quality affects stumpage prices is to compare prices in western Washington for timber sold by the Forest Service and by 

Washington DNR. Both agencies offered roughly similar sales in terms of species, 

volumes, quality, and operational requirements including offering sales for bid by 

prospective buyers. Until the early 1990s, Washington DNR timber was exportable 

and both agencies sold sales that had a mix of older second growth and old growth. 

Because of the export sales, prices for Washington DNR sales averaged 62 percent 

more than prices for Forest Service sales. Since 1992, when Washington DNR sales 

were no longer exportable, Washington DNR prices averaged 152 percent more 

than prices for Forest Service sales. This increase in price (both in absolute and 

percentage terms) reflects the increased differences in the types of timber being 

sold by the two agencies. The Washington DNR still sells an average-to-good log 

mix, and Forest Service sales, since the mid 1990s, have been mostly thinning 

sales containing smaller and lower quality timber. This conclusion is similar to one 

drawn by Spelter (2005) who observed that lower quality timber and more environmentally constrained logging are two likely reasons for generally lower Forest 

Service stumpage values. 

Discussion

Different messages emerge from this review of timber markets. One of the most 

powerful is that the stumpage market works with little oversight to allocate resources among buyers and sellers. Its volatility is a testament to its competitive 

nature—a hallmark feature embraced by economists. There is a concern that with 

the diminished levels of public sales, a smaller proportion of timber is sold using 

open process. There is no evidence yet to weigh the consequences of this on the 

market’s competitive nature.

Market forces are working with little fanfare to change the character of forest 

resources in the PNW. Some of these market forces are highly evident like overall 

economic performance, and some forces, although highly visible like public timber 

flows, have a variety of visible and invisible consequences. Still other changes 

taking place outside the region are having large consequences in the PNW. In 

the 1980s, the specter of rapid increases in southern lumber production and 

softwood lumber imports changed the competitive position of the PNW. Currently, 

The stumpage 

market’s volatility 

is a testament to its 

competitive nature.
Emergent Lessons From a Century of Experience With Pacific Northwest Timber Markets

27

international market forces are once again causing the U.S. forest sector to change 

(see Haynes et al. 2007, Ince et al. 2007 for more discussion of these changes). 

Implications of Competitive Markets

One consequence of the competitive nature of stumpage markets is the ability to 

assume that there is market arbitrage across broad spatial extents, species, quality, 

and different (but related) products. Market arbitrage is a powerful force that keeps 

prices of different species, grades, and locations within some fixed proportion to 

each other. Abstracting from transportation and transactions costs, for example, 

we conclude that prices of one species and grade will not exceed prices for other 

species of a similar grade in the long run because of possibilities of substitution. 

Market arbitrage has been illustrated working three different ways; across 

space, species, and quality. A fourth way of using market arbitrage is to describe 

the price implications for a set of products that have incomplete price reporting. 

One example of this is the use of export chip prices as a proxy for nonsawtimber 

prices in the PNW. Prices for nonsawtimber markets are increasingly relevant for 

forest management that involves nonsawtimber material such as small-diameter 

trees (those with average diameter at breast height of about 8 inches, in contrast to 

commercial saw logs that are 4.5 to 11 inches small-end diameter). Available prices 

for this small-diameter material are limited both in space and time. The only series 

(for chips) that has been reported consistently for decades are export chip series. 

Both Haynes (1999) and Busby (2006) found that there was sufficient arbitrage 

between the export chip and domestic chip markets so that price trends from the 

export market could be used to describe both markets. That is, inferences about 

price trends for nonsawtimber material can be developed by observing the trends 

for export chips (the actual data are published in table 50 of Warren 2006) and 

adjusting them to local conditions.11

Finally, because it is a competitive market, we can see how markets have 

reacted to interventions such as a small business sales program that restricted 

competition. In this case, the market responses reveal the costs of good intentions. 

Market changes can also be used to judge who wins and loses from various changes 

in market determinants. One example, is the case of restrictions that kept federal 

logs from export markets. Private landowners who were able to sell logs for export 

received higher prices than they would have if there had not been restrictions. In 

this case, they were winners in that they saw increased returns to forestry, and the 

public (who were the losers) saw reduced returns to forestry. 

11This adjustment is often in the form of a “bridge” relationship that describes local prices as 

a function of export prices for the closest customs district.
GENERAL TECHNICAL REPORT PNW-GTR-747

28

Long-Term Price Trends

Over the past century, persistently rising stumpage prices (table 2) have provided 

adequate returns to maintain or expand forests and forest management. This improved forest management and protection has created a vast forested commons that 

produces a wide range of ecosystem goods and services, many of which are free to 

those who choose to enjoy them. But the recent weakening of expected returns for 

forest management raises concerns about whether North American forests can meet 

societal expectations both for making progress toward sustainable forest management (see Haynes 2004, 2007) and for the provision of ecosystem services expected 

by increasingly urbanized populations. Economists agree that markets can allocate 

ecosystem services (such as those provided by open space) and monetize values so 

that they accrue to the landowner.

Advocates for implementing sustainable forest management (SFM) in the 

United States are lamenting that these weaker prices will reduce market incentives. They are concerned that landowners who are sensitive to investment returns 

will invest less or convert forest land to higher and better uses. This will increase 

the dependence on regulatory actions to insure necessary forest practice believed 

to make progress toward SFM. At the same time, conservation proponents are 

advocating forest management regimes (e.g., longer rotations) that lead to reduced 

financial returns and will reduce the adoptions of these management regimes by 

those landowners who are sensitive to investment returns.

Reduced expectations for the long-term rate of stumpage price appreciation 

also work against proponents of forest management regimes that embody longer 

rotations. Such regimes are being advocated by those who see longer rotations as 

promoting greater biodiversity or greater carbon sequestration. But reduced price 

expectations lead to lower financial returns and shorter rotations. 

Investors are attracted to forestry because of the possibility for high returns 

(see table in app. 3), but others have noted timber is a relatively risky investment 

that should be no more than 10 percent of a diverse investment portfolio (Hancock 

Timber Resource Group 2003). Figure 14 illustrates this riskiness;12 less risky 

investments would be in the lower left corner. But in an economic sense, riskiness 

usually offers the possibility of higher returns, and forest investments have resulted 

in such higher returns to some investors. For example, figure 14 illustrates the possibility of higher returns from ponderosa pine than other types of timber.

12Riskiness is defined here using an approach that mimics the John Hancock Timber Index 

(Hancock Timber Resource Group 2003), which is a reconstructed timber returns series.

Markets cannot 

be planned into 

existence.
0

0.5

1

1.5

2

2.5

3

0 0.1 0.2 0.3 0.4 0.5 0.6 0.7

Standard deviation

Return

Common stock

Northeast 

hardwood

Northeast 

softwood

Southern pine

Douglas-fir Ponderosa pine

Figure 14—Risk and return of owning U.S. timberland with different timber types, 1963-2002. 

(Common stock: Thompson 1997).

Emergent Lessons From a Century of Experience With Pacific Northwest Timber Markets

29

Market Frustrations

In much of contemporary forest management, planners have frequently misunderstood the nature of markets. Markets cannot be planned into existence nor their 

evolution taken for granted. Neither is the case. Markets are relatively organic and 

spring into existence where there is a need for exchange. This organic nature of 

market emergence has led to two misperceptions that are evident in some contemporary forest management issues. 

In the case of nontimber forest products, for example, there is a concern that 

there are no markets for some of these products (McLain et al., in press). This leads 

to a number of issues including how to value permits; price reporting; establishing grades; the structure of buyers, sellers, and processors/distributors; and the 

unregulated nature of the market, making it difficult for sellers, processors, and 

distributors to compete for capital. This lack of structure complicates management 

of nontimber forest products including attempts to introduce sustainable practices. 

In some of the discussions of ecosystem services, there are occasional references to market failures when discussing the apparent lack of values for such services 

as clean air or open space. But these are not market failures in the economic sense 

where the lack of information leads to the failure of markets for efficient allocation; 

instead, references like this reflect judgments about when market valuation does not 
GENERAL TECHNICAL REPORT PNW-GTR-747

30

produce prices that reflect the value of essential services. The case of clean air (or 

water) is about the value of a public good. These are societal values and not values 

established by transactions. 

Finally, our forests today exhibit the evidence of how market forces have influenced their extent, composition, structure, and ownership. In forest management, 

these forces play out sometimes over several decades. Often forest management 

advocates extol the role progressive forest management has played in reshaping 

today’s forests. While not to diminish that role of progressive forest management, it 

is the “pull” of markets that have enabled the utilization of material available from 

forest management and led to increased returns to forest management. 

Implications for Ecosystem Service Markets

What implications or lessons do timber markets offer for the emerging arena of 

ecosystem services? Foremost is the role of property rights. For a buyer or seller to 

be able to enjoy the benefits of exchange, they must have the right to sell a unique 

good or service. Whether it is a thousand board feet of timber or a single animal 

unit month of forage, the seller has the property right. That is, they own it and are 

free to exchange it. 

Nearly as important is the issue of measurable units. Can we describe the units 

of various goods and services? For consumable goods these are fairly descriptive 

units such as a thousand board feet of timber, pounds of mushrooms, bunches of 

salal, animal unit months of forage, but for nonconsumerable goods these are less 

distinct such as recreation visitor days, clean water in streams, landscape attractiveness, improved habitat, etc.

Related to this is the valuation question. To value something in an economic 

sense, you need to measure the value. This paper has focused on timber values and 

how they are set in the market place and are affected by different types of market 

interventions and issues. Timber is measured as price per thousand board feet or 

other units (cords, or tons). Without being able to measure a service, you have to 

rely on social values—still important but not set in markets. That is not to say 

that valuation of these nonmarket goods is impossible, just that it is subject to less 

precise methods.

Another implication is the role of transaction data and the richness they add to 

the discussion of markets. Transaction data give us detail about market prices and 

quantities as well as details about the buyers and sellers. 
Emergent Lessons From a Century of Experience With Pacific Northwest Timber Markets

31

Conclusion

This review has shown that markets are powerful institutions that can sweep aside 

the best-laid plans. Timber markets are highly competitive, volatile, and change 

relentlessly. They adjust across space and time as suppliers and consumers enter 

and leave the market as technical changes alter costs. 

The long-term price trends support the notion that increasing scarcity of 

sawtimber and high-quality material will result in higher prices. In general, 

the relative prices among species and regions have remained unchanged. Price 

arbitrage and substitution between products, however, act to limit the extent that 

prices for selected species and different locations can increase. The fact that prices 

generally increase more for higher priced items than for lower priced items is 

significant to forest land management decisions, because it is the dollar difference, 

not the percentage difference, that determines how much can be spent in forest 

management to increase quality to gain a price premium.

The organic nature of markets will continue to frustrate those who expect 

structure and order. But for those who do understand the transitory nature of markets, there are opportunities to use these powerful forces to change forest resources. 

The evidence of that power is all around us in the third forest that is emerging in 

the PNW.

Metric Equivalents

When you know: Multiply by: To get:

Cubic feet 0.2 Board feet

Cubic feet .028 Cubic meters

Inches 2.54 Cenitmeters

Miles 1.609 Kilometers

The power of markets 

is demonstrated in 

the third forest that is 

emerging around us.
Species List

Common name Scientific name

Cedar Chamaecyparis Spach

Douglas-fir Pseudotsuga menziesii (Mirbel.) Franco

Engelmann spruce Picea engelmanni Parry ex Engelm.

Larch Larix P. Mill.

Lodgepole pine Pinus contorta Dougl. ex Loud

Ponderosa pine Pinus ponderosa P. & C. Lawson

True fir Abies P. Mill.

Western hemlock Tsuga heterophylla (Raf.) Sarg.

Western white pine Pinus monticola Dougl. ex D. Don

GENERAL TECHNICAL REPORT PNW-GTR-747

32

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Department of Agriculture, Forest Service, Pacific Northwest Research Station. 

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Emergent Lessons From a Century of Experience With Pacific Northwest Timber Markets

37

Appendix 1: Long-Term Data Sets

Table 3—Softwood stumpage and lumber prices for Douglas-fir, ponderosa pine, and 

southern pine 

Douglas-fir Ponderosa pine Southern pine

Year Stumpage Lumber Stumpage Lumber Stumpage Lumber

1982 dollars/thousand board feet

1910 33.79 107.72 24.40 117.28 13.04 109.37

1911 34.75 98.89 18.41 121.89 25.64 124.10

1912 34.09 95.06 18.26 111.80 13.04 117.87

1913 32.27 71.53 15.06 96.47 14.81 80.66

1914 32.08 68.98 14.01 89.43 25.28 141.38

1915 36.15 88.53 17.22 119.70 18.22 103.74

1916 29.98 73.17 16.20 98.56 22.34 97.28

1917 29.88 80.42 8.95 96.77 17.48 93.86

1918 29.91 83.17 9.85 92.46 14.00 108.02

1919 30.72 103.17 10.36 116.29 16.20 120.33

1920 29.44 130.03 11.47 145.60 17.19 134.91

1921 31.19 107.31 15.69 160.33 22.62 115.54

1922 32.61 125.69 19.79 166.65 17.48 142.07

1923 32.38 155.60 18.50 190.78 17.97 171.92

1924 31.85 130.87 17.07 164.34 21.38 157.34

1925 31.06 117.52 16.65 155.48 18.61 148.50

1926 31.74 116.92 17.66 154.37 21.48 153.83

1927 32.68 118.14 17.01 158.17 21.87 144.37

1928 33.51 114.01 12.34 157.93 22.19 147.46

1929 33.16 122.25 18.08 161.41 21.95 156.47

1930 35.35 113.56 19.91 157.96 22.12 141.44

1931 35.71 95.93 27.54 163.05 27.62 135.27

1932 32.66 94.85 19.10 150.63 25.57 118.86

1933 30.90 119.40 20.30 163.41 24.36 157.60

1934 31.31 125.06 15.96 158.92 23.08 167.66

1935 31.58 115.84 14.34 147.96 33.16 132.28

1936 32.65 127.01 13.02 156.89 37.13 149.19

1937 30.98 132.40 12.19 165.09 36.14 149.28

1938 33.93 127.72 15.21 164.16 54.23 140.45

1939 33.20 134.82 14.88 171.26 44.05 148.29

1940 33.37 143.98 13.38 179.43 33.73 157.72

1941 36.02 169.13 14.22 190.39 71.87 169.46

1942 35.49 155.90 15.88 180.47 62.88 166.56

1943 37.06 158.20 28.14 181.31 58.86 167.77

1944 42.08 170.00 22.34 191.90 72.99 178.14

1945 41.23 169.04 30.71 190.19 61.27 176.63

1946 43.46 170.21 27.83 186.95 51.44 174.52

1947 41.70 250.69 26.74 227.37 43.06 269.19

1948 54.42 264.31 43.44 262.37 59.52 272.75
GENERAL TECHNICAL REPORT PNW-GTR-747

38

Douglas-fir Ponderosa pine Southern pine

Year Stumpage Lumber Stumpage Lumber Stumpage Lumber

1982 dollars/thousand board feet

1949 43.04 243.17 55.15 263.92 75.03 259.31

1950 40.37 287.47 55.19 289.36 97.80 279.98

1951 49.57 281.62 90.90 304.13 113.82 269.28

1952 55.03 285.47 76.26 308.56 130.07 279.76

1953 49.11 265.78 73.08 315.84 117.12 281.17

1954 46.96 267.53 76.59 298.50 101.37 268.08

1955 55.15 292.08 73.26 309.28 109.22 277.99

1956 78.32 281.27 73.95 320.84 123.43 278.71

1957 70.29 243.75 63.95 284.58 100.96 260.42

1958 64.05 233.59 49.76 270.24 98.42 252.93

1959 63.69 264.25 53.56 293.44 111.04 260.90

1960 71.42 244.66 49.61 277.81 108.83 256.50

1961 68.70 233.54 31.52 256.17 84.81 246.21

1962 63.06 238.81 41.81 261.25 82.02 245.22

1963 62.50 244.81 41.15 266.21 79.43 245.16

1964 63.61 247.89 49.51 268.67 87.97 245.44

1965 70.22 241.35 61.30 262.91 98.14 244.46

1966 86.34 246.64 59.46 264.25 115.92 260.50

1967 115.93 248.00 66.47 260.60 114.67 259.28

1968 106.96 288.44 88.30 297.58 123.39 287.78

1969 125.70 306.92 199.44 361.92 145.22 306.01

1970 104.31 243.74 86.99 294.97 119.51 268.70

1971 108.43 290.47 98.69 336.77 137.01 304.12

1972 122.96 324.72 165.33 381.93 164.82 329.62

1973 114.44 384.71 205.11 439.82 207.56 298.96

1974 122.34 305.03 188.04 348.40 142.43 198.26

1975 121.64 257.67 121.92 293.91 97.60 155.89

1976 155.50 306.87 166.61 351.24 142.39 182.54

1977 179.35 369.15 202.47 356.13 144.84 326.13

1978 191.57 379.41 235.62 375.24 170.24 345.24

1979 181.02 402.33 303.68 356.27 186.79 321.27

1980 158.62 324.54 229.51 262.27 138.08 218.96

1981 138.05 259.23 199.18 196.93 138.78 151.93

1982 87.06 215.14 66.90 162.85 124.00 127.85

1983 94.80 232.21 102.67 231.45 141.16 186.45

1984 96.93 214.28 118.32 245.08 136.93 200.08

1985 84.57 214.06 98.26 259.69 116.28 214.69

1986 98.95 218.03 156.29 273.67 118.76 228.67

1987 115.35 231.36 203.60 294.58 105.32 249.58

1988 155.58 241.30 170.35 307.55 116.46 262.55

1989 172.62 257.29 260.25 285.07 106.73 240.07

1990 204.58 235.57 217.79 310.01 110.28 265.01

Table 3—Softwood stumpage and lumber prices for Douglas-fir, ponderosa pine, 

and southern pine (continued)
Emergent Lessons From a Century of Experience With Pacific Northwest Timber Markets

39

Douglas-fir Ponderosa pine Southern pine

Year Stumpage Lumber Stumpage Lumber Stumpage Lumber

1982 dollars/thousand board feet

1991 224.16 230.70 203.95 267.59 109.01 207.59

1992 249.39 265.32 248.98 356.57 136.31 311.57

1993 416.71 390.02 478.28 381.53 158.96 336.53

1994 395.89 346.22 241.43 411.56 205.98 366.56

1995 363.15 302.25 119.44 307.62 214.92 262.62

1996 313.20 339.46 212.26 382.61 185.59 337.61

1997 327.11 341.22 211.59 404.83 228.06 359.83

1998 260.75 280.99 164.18 434.89 244.37 389.89

1999 281.39 322.19 143.08 597.82 231.08 552.82

2000 232.53 266.26 114.69 372.99 221.22 327.99

2001 183.78 247.55 85.11 386.73 195.04 341.73

2002 207.95 246.06 86.49 371.27 209.00 311.27

2003 138.89 242.25 79.94 117.61

2004 115.18 292.30 44.31 123.98

The original data for 1910-1972 are a mix of national forest timber sale data and prices for privately owned timber (see 

table 2, Appendix V USDA FS 1973). Similar data for 1973 to 2004 are found in table 20 of Howard (2003). The data 

shown here are adjusted from the original data to represent harvest prices for all species (and all owners) in the Douglasfir region (western Washington and Oregon) and to represent stumpage prices (for all owners) in the South-Central region. 

The data are deflated using the producer price index (1982 = 100).

Table 3—Softwood stumpage and lumber prices for Douglas-fir, ponderosa pine, 

and southern pine (continued)
GENERAL TECHNICAL REPORT PNW-GTR-747

40

Table 4—Prices for Northeastern 

softwood and hardwood sawtimber 

Year Hardwood Softwood 

1982 dollars/thousand board feet

1961 43.171 43.867

1962 43.508 44.811

1963 45.364 47.149

1964 44.874 45.709

1965 45.319 47.907

1966 47.429 47.661

1967 44.641 48.814

1968 47.213 49.056

1969 50.331 51.098

1970 51.894 47.930

1971 49.682 48.979

1972 51.852 48.829

1973 46.709 46.433

1974 74.729 45.527

1975 66.176 48.836

1976 69.532 51.466

1977 74.094 51.057

1978 88.974 54.827

1979 103.793 59.635

1980 88.864 54.705

1981 82.908 49.994

1982 85.669 52.545

1983 103.519 50.528

1984 100.934 50.834

1985 101.600 51.968

1986 113.703 53.241

1987 129.032 56.876

1988 152.801 57.244

1989 127.252 58.381

1990 122.738 57.459

1991 119.942 55.915

1992 145.430 55.944

1993 189.968 60.108

1994 202.689 65.866

1995 185.735 69.276

1996 174.359 69.069

1997 201.666 75.886

1998 207.133 80.276

1999 207.095 85.551

2000 224.379 83.733

2001 199.470 77.944

2002 211.134 78.387

The data for 1961-1991 are from Sendak (1994). He also 

provided updates for the same series through 2002.
Figure 15—Supply and demand representations showing the price premium for exportable logs.

Q3 Q4 Q2 Q1 Q5

EXS1

Domestic

demand

(dx)

Quantity (Q)

Domestic

supply (sx) P3

P2

P1

P4

Price (P)

International 

demand

Excess 

supply (EXS)

EXS2

Q2

' Q5

'

Emergent Lessons From a Century of Experience With Pacific Northwest Timber Markets

41

Appendix 2: Price Setting in an Economic Context 

Figure 15 illustrates two cases of how economists view price setting. In the most 

common form (on the right side of fig. 15) the intersection of supply and demand 

functions (labeled dx and sx) are assumed to set the price and quantity (labeled 

P1 and Q1). Such prices and quantities are sometimes called the equilibrium 

price and quantities because they represent the intersection of the supply and 

demand functions.

The responsiveness of supply and demand functions in terms of changes in 

prices is measured by their elasticities (e). These are computed at some point (P1, 

Q1) as the product of that point and the slope of the supply or demand function. 

This relationship is expressed as: 1

1

∆Q P

∆P Q 

ε = �

Supply elasticities have a positive value reflecting how supply functions slope 

upward to the right (see fig. 15). Demand elasticities are negative reflecting the 

downward sloping demand functions. Elasticities are typically described as being inelastic (e < 1.0) elastic (e > 1.0), and in rare cases unity (e = 1.0). There are 

no units associated with e. Finally, most studies of stumpage markets have found 
GENERAL TECHNICAL REPORT PNW-GTR-747

42

stumpage to be inelastic (see Adams and Haynes 1996). The implication is that 

small changes in quantities lead to larger price changes.

Figure 15 can also be used to illustrate how the opportunity for trade affects 

price setting in single markets (as illustrated in the case of log exports). First, 

assume that the supply and demand functions (sx, dx) represent the U.S. domestic 

stumpage market. Along the left (the price) axis we have introduced two additional 

functions. The excess supply function (EXS) is the horizontal distance between 

the domestic supply and demand functions (i.e., Q5 - Q2 ). Its origin on the price 

axis is the equilibrium price in the domestic market without trade (P1). This excess 

supply function represents the excess U.S. stumpage available at prices above the 

equilibrium price (P1). The other new function is the excess demand for stumpage 

from another market (labeled international demand). In the case of the log export 

trade, this function would represent the demand in several Pacific Rim markets 

that import logs from the United States. In the case of two markets or any multiple 

of markets, equilibrium conditions are set by the intersection of the excess supply 

and excess demand functions. In this case, the price allowing for trade would be 

P4 with quantity Q4 being exported and the quantity Q2 being consumed in the 

domestic market. Total production for both markets is Q5. Important to note is 

that in the presence of trade, prices rise in the domestic market (from P1 to P4 ), 

consumption falls (from Q1 to Q2 ), and total production, increases from Q1 to Q5. 

Not illustrated here, prices fall in the importing regions and consumption expands 

with the advent of trade among the regions.

Figure 15 also illustrates the market effects of restrictions on the export of 

federal logs. These restrictions shift the excess supply curve (EXS) back toward the 

price axis (from EXS1 to EXS2 ). The amount of this shift is the volume restricted 

from export. The bifurcation of the market results in a higher price (P3 ) for logs 

that can be exported and a lower price (P2 ) for stumpage restricted to the domestic 

market. In both cases, prices are higher than without trade where the price would be 

P1. The difference P3 – P2 is the export price premium. 

With log export restrictions, there are reductions in both the volume of log 

exports from Q4 to Q3 and in total production. But with lower prices, domestic 

consumption increases from Q2 to Q'

2 . Even those landowners whose logs are 

restricted from export benefit as prices rise from P1 to P2. This increase in prices 

partially explains the higher prices for federal sales in the Pacific Northwest relative 

to other regions.
Emergent Lessons From a Century of Experience With Pacific Northwest Timber Markets

43

Appendix 3: Rate of Return Data Set

Table 5—Rates of return for Douglas-fir, southern pine, ponderosa pine, 

northeast softwood, and northeast hardwood stumpage

Year Douglas-fir

Southern 

pine

Ponderosa 

pine

Northeast 

hardwood

Northeast 

softwood 

Percent per year

1912 2.24 1.61 2.02

1913 2.16 1.65 1.98

1914 2.20 3.06 2.00

1915 2.44 1.89 2.53

1916 2.07 2.04 2.30

1917 2.10 1.82 1.55

1918 2.25 1.59 1.89

1919 2.29 2.04 2.40

1920 2.21 2.18 2.45

1921 2.31 2.47 2.90

1922 2.36 1.84 2.90

1923 2.27 1.86 2.31

1924 2.22 2.27 2.09

1925 2.20 1.93 2.15

1926 2.26 2.10 2.32

1927 2.31 2.12 2.24

1928 2.31 2.03 1.82

1929 2.25 1.99 2.62

1930 2.34 2.00 2.69

1931 2.31 2.34 2.91

1932 2.13 2.04 1.97

1933 2.10 1.89 2.04

1934 2.23 1.90 1.97

1935 2.27 2.54 1.92

1936 2.31 2.40 2.04

1937 2.20 2.04 2.08

1938 2.35 2.64 2.56

1939 2.28 1.97 2.37

1940 2.24 1.57 2.08

1941 2.37 3.18 2.26

1942 2.28 2.23 2.47

1943 2.30 1.83 3.53

1944 2.49 2.27 2.27

1945 2.31 1.91 2.59

1946 2.32 1.68 2.32

1947 2.23 1.68 2.12

1948 2.67 2.36 3.14

1949 2.10 2.59 3.04
GENERAL TECHNICAL REPORT PNW-GTR-747

44

Year Douglas-fir

Southern 

pine

Ponderosa 

pine

Northeast 

hardwood

Northeast 

softwood 

Percent per year

1950 1.98 2.58 2.42

1951 2.54 2.41 3.22

1952 2.57 2.30 2.31

1953 2.16 1.95 2.06

1954 2.10 1.76 2.29

1955 2.47 2.00 2.22

1956 3.03 2.23 2.23

1957 2.33 1.83 2.05

1958 2.04 1.83 1.82

1959 2.17 2.15 2.16

1960 2.43 2.05 2.19

1961 2.27 1.69 1.66

1962 2.10 1.79 2.30

1963 2.17 1.94 2.43 1.80 1.82

1964 2.27 2.12 2.54 1.76 1.74

1965 2.42 2.23 2.76 1.76 1.79

1966 2.68 2.32 2.36 1.81 1.77

1967 2.95 2.09 2.40 1.71 1.78

1968 2.33 2.09 2.84 1.78 1.77

1969 2.44 2.29 4.51 1.86 1.80

1970 2.10 1.86 1.72 1.82 1.70

1971 2.16 2.05 1.71 1.72 1.74

1972 2.48 2.37 3.40 1.77 1.76

1973 2.23 2.49 3.02 1.66 1.69

1974 2.30 1.70 2.27 2.36 1.70

1975 2.29 1.37 1.67 1.85 1.82

1976 2.66 2.27 2.37 1.73 1.85

1977 2.67 2.26 2.83 1.86 1.77

1978 2.46 2.25 2.65 2.03 1.83

1979 2.21 2.24 2.82 2.06 1.90

1980 2.03 1.70 2.04 1.66 1.70

1981 1.96 1.80 1.85 1.58 1.60

1982 1.62 1.86 1.19 1.75 1.75

1983 1.99 2.10 1.84 2.01 1.73

1984 2.35 2.04 2.80 1.83 1.73

1985 2.07 1.78 2.09 1.74 1.78

1986 2.39 1.92 2.94 1.89 1.79

1987 2.63 1.86 3.09 1.98 1.84

1988 2.91 2.05 2.17 2.05 1.80

1989 2.64 1.95 2.86 1.64 1.78

1990 2.61 1.98 2.27 1.60 1.74

1991 2.53 2.01 2.02 1.70 1.71

1992 2.49 2.32 2.52 1.98 1.73

Table 5—Rates of return for Douglas-fir, southern pine, ponderosa pine, 

northeast softwood, and northeast hardwood stumpage (continued)
Emergent Lessons From a Century of Experience With Pacific Northwest Timber Markets

45

Table 5—Rates of return for Douglas-fir, southern pine, ponderosa pine, 

northeast softwood, and northeast hardwood stumpage (continued)

Year Douglas-fir

Southern 

pine

Ponderosa 

pine

Northeast 

hardwood

Northeast 

softwood 

Percent per year

1993 3.37 2.38 3.86 2.24 1.84

1994 2.51 2.51 1.79 1.98 1.91

1995 2.09 2.23 1.12 1.69 1.86

1996 1.98 1.84 2.55 1.63 1.78

1997 2.20 2.19 2.63 1.89 1.86

1998 1.97 2.23 1.91 1.87 1.87

1999 2.18 1.97 1.88 1.77 1.86

2000 2.04 1.91 1.86 1.85 1.76

2001 1.81 1.82 1.72 1.66 1.66

2002 2.25 2.01 2.04 1.75 1.71

2003 1.82 1.45 2.15

2004 1.71 1.65 1.54

These were computed as: 

rate of return = 

2 pricet-1 + pricet-2 /3

income rate pricet + [2 pricet + pricet-1]/3 –  1

The income rates are 1.25 for Douglas-fir and ponderosa pine, 1.00 for southern pine and 0.75 for northern 

species. See Hancock (2003) for details for the various assumptions.
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