MEASURING NET INVESTMENT AND PRODUCTIVITY IN TIMBER PRODUCTION

An index number approach is developed for measuring changes in inputs, outputs, and total factor productivity in a timber-producing sector. These methods are applied to timber production in the U.S. South for t he period 1952 to 1985. Results suggest that development of the sector may be described by an adjustment phase between 1952 and 1962 and a g rowth phase between 1962 and 1985. Aggregate output grew during the la tter period at an annual rate of 2.0% for the forest industry and 1.2% for all other private lands. Input growth was also strong for the ind ustry reflecting expansion in both the area of timberland and the inte nsity of management. On other private lands, however, timberland and i nputs showed steady declines. Output growth net of input growth shows that productivity grew at about 0.5% per year on the industry lands an d 2.5% per year on other private lands. However, the strong productivi ty measure for the other private ownership likely reflects measurement error related to the classification of timberland. These results demo nstrate the potential hazards of using either trends in timberland are a or gross investment (planting) alone to assess the development of a timber-producing sector.