Wet weather = increased costs = more BMPsDry weather = reduced costs (but not so much compared to the increased costs of wet weather) = improved and less expensive access into areas that usually cannot be harvested = some increases in BMP establishment if seeded logging sets and skid trails don’t have adequate moistureClimate change makes it tough to plan, normal cycles of purchase and storage can be disrupted, mill supplies can reach critical levels if rains disrupt harvest in what is normally a “drier” portion of the year
Prices versus precipitation deviation (not total rainfall, but deviation from median amount) While Palmer's indices are water balance indices that consider water supply (precipitation), demand (evapotranspiration) and loss (runoff), the Standardized Precipitation Index (SPI) is a probability index that considers only precipitation. The SPI is an index based on the probability of recording a given amount of precipitation, and the probabilities are standardized so that an index of zero indicates the median precipitation amount (half of the historical precipitation amounts are below the median, and half are above the median). The index is negative for drought, and positive for wet conditions. As the dry or wet conditions become more severe, the index becomes more negative or positive.Plot of timber prices from 2001 to mid-2012
Correlation is statistically significant at the 5% level of error
Impact of weather on harvesting and stumpage prices Matthew Pelkki, R.F., C.F., Ph.D. George H. Clippert Endowed Chair
Impacts of Weather on Harvesting• Wet weather• Drought/dry weather• Climate change = difficult planning
Impacts of Weather on Stumpage Prices $35 2.500 Standard Precipitation Index $30 2.000Hardwood Sawtimber (Arkansas State Avg.) 1.500 Stumpage Price $25 1.000 $20 0.500 $15 0.000 $10 -0.500 $5 -1.000 $0 -1.500 Jul-98 Apr-01 Jan-04 Oct-06 Jul-09 Apr-12 Dec-14 Hdwd Saw Prices Standard Precipitation Index
Impacts of Weather on Stumpage Prices $15 2.500Change in Hardwood Sawtimber Standard Precipitation Index 2.000 (Arkansas State Avg.) $10 Pervious Quarters 1.500 Stumpage Price 1.000 $5 0.500 $0 0.000 -0.500 -$5 -1.000 -$10 -1.500 Jul-98 Apr-01 Jan-04 Oct-06 Jul-09 Apr-12 Dec-14 Hdwd Saw Prices Standard Precipitation Index
Conclusions• Deviation from expected precipitation levels in the previous period explains between 6 and 20% of the changes in stumpage prices – Drier means lower prices – Wetter means higher prices• Still many other factors more significant and important in affecting stumpage prices for timber• Economists and weather forecasters cannot be separated on the basis of accuracy in predicting the future.