Federal Timber Restrictions and Interregional Arbitrage in U.S. Lumber

Harvesting restrictions to protect the habitat of the northern spotted owl on federal forests in the Pacific Northwest (PNW) substantially reduced timber available for processing by the forest products industry. We consider the extent to which these restrictions may have altered the degree of integration of the PNW and U.S. South in a national market for lumber. Descriptive statistics and econometric analysis of monthly price data suggest that a structural break occurred in the relationship between the two regions' product prices around the time of the harvest restrictions leading to a more integrated market after the restrictions were imposed