A regression analysis exploring the impact that sawmills and production have on Southeast softwood timber prices

Abstract

Abstract: This analysis focused on the price and production of softwood saw timber in the states of North Carolina, South Carolina and Virginia. Since the preponderance of softwood timber production occurs along the eastern portion of these states, only specific regions were used for modeling purposes. The data was analyzed via a 2 stage least squares regression model which determined the relationship and effect between the number of sawmills, and estimated production within in a particular region and the price for timber. After analyzing the data, it was determined that the positively correlated relationship that exists amongst the independent variables in the time series format does not exist when a regional, spatial component is taken into account. The negative relationship exists between prices and markets on a regional level at the 98% confidence interval. The elasticity of sawmills was determined to be a 1% increase in sawmills leads to a 5% decrease in prices.