State timber sale policies and programs: A multiple methods assessment

This study attempted to identify the policies, procedures, and contract provisions that define an effective and efficient state timber sale program. More specifically, its goals were to identify important characteristics of and administrative procedures associated with effective state timber sale programs in the U.S. and to assess the degree to which various factors, including market conditions, timber tract characteristics, contract provisions, and administrative procedures influence the prices paid for stumpage. Four different methods of data collection and analysis were used to accomplish these goals. First, a national survey of state timber sale programs was used to describe the characteristics of and administrative procedures associated with state timber sale programs across the country. Second, focus group methodology was used to obtain perceptions and attitudes of selected state timber sale program supervisors regarding common barriers to effective public timber sale administration. Third, a hedonic analysis of Minnesota Department of Natural Resources (MN DNR) timber sale records was used to describe how contract, timber tract, and administrative factors influence stumpage prices. Finally, a paired bidding economic field experiment was used to assess how buyers differentiate their willingness to pay for MN DNR stumpage when timber sale contract length and reserve prices are varied.;State timber sale programs are extremely diverse, but study findings revealed several common administrative procedures and barriers to effective program operations. First-price sealed bid auctions and 2-year contracts are frequently used to sell state-owned stumpage. Timber sale program supervisors believe their programs could better achieve forest management goals if foresters and timber sale staff are given greater flexibility to tailor the method of sale to tract-specific conditions. Supervisors also believe programs could achieve management goals more effectively by adopting procedures that reward stumpage purchasers who display a commitment to following best management practices, meeting contract obligations, and harvesting timber in a timely manner.;Several MN DNR administrative policies and procedures influence stumpage bidding behavior and state stumpage prices. For example, prices paid for medium volume timber tracts were significantly lower than large tracts and significantly higher than small tracts. Also, long timber sale contracts increased stumpage prices, but the degree of influence depended almost entirely on expectations about future market conditions. Lower reserve prices elicited lower stumpage bids, but reserve price impacts were entirely firm-specific. Somewhat surprisingly, restricting large firms from bidding on state-owned timber did not reduce stumpage prices.;Numerous opportunities to improve state timber sale program design and administration exist, including greater use of sealed bid auction methods to increase gross revenue and reduce the likelihood of exorbitant or preclusive bidding, offering more large timber tracts for sale to increase gross revenue, and utilizing 2-year timber contracts to reduce price speculation and encourage more timely timber harvests without substantially limiting the flexibility stumpage purchasers need to manage their inventory of stumpage contracts. Further research investigating the merits of unique timber sale policies and procedures, such as restricting large firms from participating in a portion of timber auctions, log-sort sale methods, second-price sealed bid auctions, and incentives to reward high-quality loggers may help improve future state timber sale program design and administration.