Economic Performance of a Government Controlled Stumpage System

Shashi Kant, Associate Professor in the Faculty of Forestry, University of Toronto

Date: Friday December 07, 2007

The presentation is now available on our website, in PDF format. Please visit our
Publications page, under "Presentations" - also directly available by clicking here.

~ also available, a recent paper on this issue: "Market Performance of the Government-Controlled but Market-Based Stumpage System of Ontario" by Feng’e Yang, Shashi Kant, and Chander Shahi (.pdf 157KB)

About the lecture: The United States’ forest industry and policy makers may not like to believe it, but an economic analysis has demonstrated clearly that Ontario’s stumpage system, which is based on market prices of wood products but controlled by the Ontario government, performs as good as other pricing systems of standing timber. The comparison of Ontario’s-controlled stumpage system with the auction-based stumpage system in British Columbia, and evidence from the U.S. timber auctions, indicate that Ontario’s stumpage system is as good as the auction system in terms of reflecting the market value of standing timber. Based on these economic analysis results and the context by which the U.S. anti-dumping investigation and administrative reviews were conducted, it is clear that the Ontario softwood lumber industry did not dump softwood lumber into the U.S. market during the study period. Additionally, Ontario’s stumpage system provides guaranteed funding for regeneration and protection of forests. These additional charges to licensees contribute to the sustainability of forests and communities. Hence, the government controlled stumpage system, if designed and revised regularly to incorporate dynamics of wood products markets, may prove better than the market system, specifically for sustainability of forests and communities.

Shashi Kant is an Associate Professor in the Faculty of Forestry, University of Toronto. He specializes in forest resource economics and forest management systems with emphasis on economics of sustainable forest management (SFM) which requires extension of the boundaries of forest economics beyond the conventional paradigm of economics of sustained yield timber management. He has termed this new paradigm as Post-Newtonian economics. Dr. Kant has received Ontario's Premier Research Excellence Award (2004), IUFRO Scientific Achievement Award (2006), and CIF Scientific Achievement Award (2007). He is the Editor-in-Chief of a book series on Sustainability, Economics, and Natural Resources and is on the Editorial Boards of the Canadian Journal of Forest Research, and Journal of Forest Economics. He has authored or co-authored 3 books and more than 60 refereed articles.