Presentation on theme: "Timber Auctions Kurt Niquidet. Background/Research Motivation 95% of forest land base in Canada owned by public Timber harvesting rights granted to private."— Presentation transcript:
Background/Research Motivation 95% of forest land base in Canada owned by public Timber harvesting rights granted to private companies through long term tenures. Charges for cutting timber administered via a pricing formula US claims this formula does not collect resource rents and subsidizes the Canadian timber industry. 27% CVD since 2001 – US$ 5 Billion thus far. Resolution to dispute proposed by US DOC – Auction timber
British Columbia Market Pricing System (MPS) Auction 20% of timber (first price sealed bid auction) and use as a basis for pricing non-auctioned tenures Hedonic Pricing Model – Known as transaction evidence appraisal Potential competition issues. Timber is low valued/unit weight. Creates regional markets which are concentrated.
Existing model Bid Equation function of timber tract characteristics such as tree size, species, slope of site, Distance to nearest processing facility Number of Bidders which is endogenous. In some cases no bidders (truncated model) Number of bidders equation regional dummy variables, reserve price, bid preparation costs
Future research and issues Improve the hedonic model enrich the number of bidders entry decision. Need more spatial data. Location of timber relative to all potential bidders. Get “no-bid data“ – Heckman model? Uses Set appropriate reservation prices Panel Model? Map extensive and intensive margins