PelkkiImpactofWeatheronStumpage
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This document discusses the impact of weather, specifically precipitation levels, on timber harvesting and stumpage prices. It presents data showing that stumpage prices for hardwood sawtimber in Arkansas are higher when precipitation levels are above average and lower when precipitation is below average. The deviation from expected precipitation in the previous period explains 6-20% of the changes in stumpage prices, with drier conditions corresponding to lower prices and wetter conditions corresponding to higher prices. However, many other factors have a more significant influence on stumpage prices than weather alone.
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PelkkiImpactofWeatheronStumpage
- 1. Impact of weather on harvesting and stumpage prices Matthew Pelkki, R.F., C.F., Ph.D. George H. Clippert Endowed Chair
- 2. Impacts of Weather on Harvesting โข Wet weather โข Drought/dry weather โข Climate change = difficult planning
- 3. Impacts of Weather on Stumpage Prices $35 2.500 Standard Precipitation Index $30 2.000 Hardwood 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
- 4. Impacts of Weather on Stumpage Prices $15 2.500 Change in Hardwood Sawtimber Standard Precipitation Index 2.000 (Arkansas State Avg.) $10 Pervious Quarter's 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
- 5. Conclusions โข Deviation from expected precipitation levels in the previous period explains between 6 and 20% of the changes in stumpage prices โ Drier means lower prices โ Wetter means higher prices โข Still many other factors more significant and important in affecting stumpage prices for timber โข Economists and weather forecasters cannot be separated on the basis of accuracy in predicting the future.
Editor's Notes
- 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 donโt 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 โdrierโ 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