By: Sohngen, Brent; Mendelsohn, Robert; Sedjo, Roger A.
Several papers have now estimated the impact of climate change on national timber markets, but few studies have measured impacts globally. Further, the literature on impacts has focused heavily on changes in productivity and has not integrated movements of biomes as well. Here, a dynamic model of ecological change and economic change is developed to capture the impact of climate change on world timber markets. Climate change is predicted to increase global timber production as producers in low-mid latitude forests react quickly with more productive short-rotation plantations, driving down timber prices. Producers in mid-high latitude forests, in contrast, are likely to be hurt by the lower prices, dieback, and slower productivity increases because of long-rotation species. Consumers in all regions benefit from the lower prices, and the overall impacts of climate change in timber markets are expected to be beneficial, increasing welfare in those markets from 2% to 8%.