FEDERAL TIMBER RESTRICTIONS AND INTERREGIONAL ARBITRAGE IN US LUMBER

Harvesting restrictions to protect the habitat of the northern spotted owl on federal forests in the Pacific Northwest (PNW) substantially r educed timber available for processing by the forest products industry . We consider the extent to which these restrictions may have altered the degree of integration of the PNW and U.S. South in a national mark et for lumber. Descriptive statistics and econometric analysis of mont hly price data suggest that a structural break occurred in the relatio nship between the two regions' product prices around the time of the h arvest restrictions leading to a more integrated market after the rest rictions were imposed.