Timber Salvage Economics

It could be argued that perhaps the most dismal sub-discipline within the dismal science of economics is salvage economics. In the wake of catastrophic events such as pest epidemics, storms, or fires, forest managers make complex and often controversial decisions about scavenging value from wounded, dead, or dying trees. For profit-maximizing landowners, salvage decisions must balance the cost of harvesting operations in difficult conditions with the revenue obtainable from damaged timber. On public forest lands, salvage decision-making is further complicated by the fact that managers need to consider trade-offs between the net value of timber extracted and the impact of salvage activities on a suite of ecosystem services that are valued by people.

The goal of this chapter is to provide the reader with an overview and working knowledge of the main topics in timber salvage economics. The following section of this chapter describes how large scale natural disturbances affect timber markets and timber market participants. This is followed by a discussion of the role of timber salvage in private and public landowner decision models. To provide a concrete example of the methods described in this chapter, we include a case study of the timber market effects of a recent, large disturbance—the Biscuit Fire of 2002.