Is It Time to Redefine What Supply and Demand Mean?, 1995 Global Fiber Supply Symposium Proceedings

Bruce R. Lippke

University of Washington

Non-timber demands on the forest such as protection of endangered species habitat are causing regulatory constraints on supply, affecting resource prices and production capacity. The cost of these constraints is high and research on how to create habitat has shown there are management alternatives that could greatly reduce the costs if markets were used to motivate producers to respond to the non-timber demands. Given continued reliance on regulatory constraints, supply competitiveness is changing with both short- and long-term impacts. Model simulations of these constraints show expansion in the US will be regionally restricted and on net, fairly limited. Transfer of wealth to other producing regions will stimulate their expansion. While a more focused approach to responding to these non- timber demands through market incentives could potentially reduce the cost greatly, the dislocation, and the loss in US competitiveness, the volatility caused by regulatory approaches may remain the better outlook.