Scandinavian Working Papers in Economics

Working Papers,
National Institute of Economic Research

No 77: An Environmental Accountant`s Dilemma: Are Stumpage Prices Reliable Indicators of Resource Scarcity?

Anni Huhtala (), Anne Toppinen () and Mattias Boman
Additional contact information
Anni Huhtala: National Institute of Economic Research, Postal: National Institute of Economic Research, P.O. Box 3116, SE-103 62 Stockholm, Sweden
Anne Toppinen: Finnish Forest Research Institute
Mattias Boman: National Institute of Economic Research, Postal: National Institute of Economic Research, P.O. Box 3116, SE-103 62 Stockholm, Sweden

Abstract: In resource accounting, shadow prices of natural resources and environmental effects should be used as the social marginal value of goods. Since it is difficult to measure shadow prices in practice, market prices are often used as proxies for shadow prices. A prerequisite for the use of these proxies is that there is an established relationship between size of the natural resource stock of interest and its market price. We have unique data sets on physical timber inventories in Finland and Sweden to analyze whether changes in stumpage prices have actually reflected changes in the stocks during the past seventy years. Cointegration and unit root tests are used for analyzing whether changes in market stumpage prices have reflected changes in physical timber stocks in Finland and Sweden during the past seventy years. The results indicate that no long-term equilibrium relationships exist between the timber prices and stocks.

Keywords: stumpage prices; timber stocks; renewable resources; cointegration

JEL-codes: C32; Q23

27 pages, November 1, 2001

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