Market Performance of the Government-Controlled but Market-Based Stumpage System of Ontario
Authors: Yang, Feng'e1; Kant, Shashi1; Shahi, Chander1
Source: Forest Science, Volume 52, Number 4, August 2006 , pp. 367-380(14)
Abstract:
The market performance of the government-controlled stumpage system of Ontario is investigated by examining the relationships between the stumpage prices and the market prices of end products (lumber, composites, and pulp) produced from standing timber, using monthly data from June 1995 to Feb. 2005. The long-run equilibrium relationship between the stumpage price and the relevant market price is tested using Johansen's multivariate co-integration approach. In addition, the Granger-causality between the stumpage price and the relevant market price is also analyzed. Test results indicate that the Ontario stumpage system is working well with respect to the stumpage prices of SPF (spruce, pine, fir) for softwood lumber and pulp, while there is a need for changes and modifications in terms of revising different parameters of the system with respect to stumpage prices of SPF for composites, and stumpage prices of red pine and white pine timber for lumber. Test results are inconclusive for the stumpage price of red pine and white pine for composites.Keywords: Johansen's multivariate co-integration approach; long-run market equilibrium relationship; Granger-causality; Ontario; stumpage price; market-based stumpage system
Document Type: Research article
Affiliations: 1: Shashi Kant, Faculty of Forestry, University of Toronto, 33 Willcocks Street, Toronto, Ontario M5S 3B3, Canada—Phone: (416) 978-6196; shashi.kant@utoronto.ca., Fax: (416) 978-3834
