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r:, INTRODUCTION ~ The Rio Grande National Forest plan of 1985 is under revision. An important part of this revision is a, realnsideration of the Rio Grande sawtimber supply and demand situation, including the role that the Rio Grande National Forest plays in the sawtimber economy. Since the 1985 plan, important structural changes bave occurred in both the forest industry and in the Rio Grande sawtimber Prosrams. Fuelwood, . Christmas Trees, and Post market trends are also cbarted and briefly discussed. This administrative study focused on the sawtimbCr market as to where it has been since the forest plan of 1985, where it is now, and its future as affected by potential Rio Grande N.F. timber supply levels that could result &om the forest plan revision. For the sawtimber market, hypothetical timber supply levels are evaluated to address potential implicationS of the plan revision on the structure of the sawtimber economy. The key trends affecting sawtimber supply, demand and then the overall market and its likely future at three potential Rio Grande forest supply levels. By evaluating the sawtimber supply, demand, and then the overall market situation, key trends are illustrated and potential changes to the timbershed are identified. These are related to the main economic factors that drive them, and to the Rio Grande forest timber supply. To provide this analysis, atimbershed is first identified because several Rio Grande processors operate beyond the Rio Grande National Forest boundary and some purchasers outside the Rio Grande forest area purchase Rio Grande timbershed sales. RIO GRANDE 'TIMBERSHED The geographical scope of this study is defined by the Rio Grande timbershed. The timbershed extends beyond the Rio Grande forest boundaries to include timber supply and demand elements from adjacent National Forests, and in some cases parts of adjacent National Forests. The primary consideration in designing the timbershed is that timber sold in one part of the timbershed would readily substitute for timber sold in another part of the timbershed. Thus, nW2r purchasers operating in the timbersbed aTe assumed to be able to substitute sale volume in one Ranger District in the timbershed for volume from another Ranger District. The boundaries of the Rio Grande timbershed were arranged in consultation with representatives of each affected National Forest and with representatives of the timber industry. These boundaries include: . Rio Grande National Forest (all) . Gunnison - Cebolla and Taylor River Ranger Districts . Pike San Isabel - Salida and San .Carlos Ranger Districts . San 1uan - All districts except Dolores This timbershed is illustrated in the map in Appendix A. Because the sawtimber economy is dynamic, marginal changes in the true timbershed border definition occur with time. For example, other things being equal, higher product prices allow purchasers to compete at greater distances. This eff'cctivelyextends timbershed boundaries. In the preparation of this study, most purchasers were aware of and sensitive to recent changes in purchasing patterns by major purchasers. The boundary used in this study was constructed to include principle eff'ects over the previous five years. In establishing the timbershed boundary, timber sale data were analyzed for consistency in purchasing patterns. The boundaJy arrived at best reflects the previous five years (FY '91-'87) purchasing patterns. (, CJ 2 5 3 4