WSP10623

• File Number: 8507
• Description: Rio Grande Project
• State: CO
• Basin: Rio Grande
• Date: 7/1/1994
• Title: Rio Grande National Forest Analysis of the Management Situation part 2
• Water Supply Pro - Doc Type: Report/Study

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SAWTIMBERDEMANDI

The following provides a cbaractCrization of sawtimber demand in the Rio Grande timbershed that is used
10 assess the overall quantity of sawtimber demand. Sawtimber demand is addressed from the perspective
of the primal)' processors who purchase sawtimber sales in the timbershed.

Several elements of ck:mand are combined 10 make the overall assessment. These include:

. the primaly processing infrastructure and the volumes they arc: clesisned 10 process on a regular
basis (less thaIl capacity);

. processors' ability 10 'obtain stumpage from state, private and BLM lOurces;

. Stolle FORSt lDdustries recent purchasing pattems;

. . lumber prices;

. and recent cut levels.

These elements of sawtimber demand arc: used 10 assess the quantity of sawtimber that could reasonably be
processed from the Rio Grande timbershed. Tbelevel estimated reflects what the currently established
industry is installed 10 process without any appreciable changes and without much effect on stumpage
prices. Each processor in the Riu Grande timbershed is identified in Appendix D. The demand for
stumpage, which starts with the consumer, reaches th :ough the processing infrastl'Ucture 10 the forest.
Beo>'''''' of this effect, blown as "derived demand," we will use processing infrastructure as a proxy for
sawtimber dc:mand. Hence, mill closures will denote a demand clecline and mill expansions will denote a
demand increase,

These elements of demand are later combined with stumpage prices, and supply in the discussion of the
overall sawtimber CCODomy and its potential future, '

PRIMARY PROCESSING INFRASTRUCTURE

The industry in the timbershed is characterized by one large processor, Stone Forest Industries, several
moderate sized mills and a host of small and specialty processors. The "top. purchasers in the timbershed,
listed in order of sawtimber volume purchased over the last ~ fiscal years arc: illustrated below.

1 Formal econometric methoc1s woUld suggest estimation of a demand function in equation form where quantity
demanded is diredly related \0 price and other demand attributes. This process will not be IISed here for purposes
of Clarity. Instead, elements of demand are discussed qualitatively and then related to stumpage prices, lumber
prices, quantity sold, and other dala. These and other elements are then combined wi~,so)D.sJ~gment to suggest
a c:um:nt level of delllllld, given the current installed processing base and general ecoJo~~~ent.

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