Recovery Plan for the Northern Spotted Owl - DRAFT

The tendency of the supply curve to shift leftward over time due to harvestingis counteracted by the natural growth of trees in the inventory and by technologicaldevelopments that reduce the costs of harvesting and transportation.The timber market tends to balance the overall rate of harvest with the rates ofgrowth and technological progress.In recent decades, federal timber harvest policy has provided assurance offuture timber supplies, preventing the depletion of timber on private landsfrom causing expectations of higher future prices which are the market's signalto delay harvesting. As a result, private harvests have not slowed, creating adip in the potential for harvest during the next decade or two.The additional harvest from private forestlands also is likely to be limited bytwo factors that will tend to counteract the tendency for timber prices toremain higher. First, during the period of higher timber prices, some mills willbe forced to close. The resulting decrease in mill capacity in the Northwestwould appear in Figure H. 14 as a downward shift in the demand curve. Second,the rate of timber harvest in other regions also would increase in responseto the higher price. More lumber would be produced in other regions, puttingfurther downward pressure on the demand for timber in the Northwest. Thedownward movement of the demand curve would tend to put downwardpressure on timber prices, undercutting the increased harvest on privateforestlands.4. The Demandfor Labor in the Timber Industry.Reduced employment is an important effect of owl conservation measures,particularly at the personal and local levels. Because people lose their jobs andincome, employment reductions are regarded as undesirable impacts. Whilesuch effects are bad at the personal and local level in the short run, paradoxicallythey are much less damaging over the long run at the regional andnational level. To assess employment effects, it is useful to understand howlabor markets operate to put people to work in ways that achieve greater totaloutput and how timber availability affects employment.Economists usually consider the labor involved in any enterprise like timberharvesting or milling to be a cost rather than a benefit. Businesses correctlyregard labor costs as an important element of total production costs in theirefforts to operate efficiently. The labor used in timber harvest and millingcould contribute to producing other goods. Its cost is a measure of the otherproduction given up by using labor in the timber industry. Over the long run,labor-saving measures are usually beneficial to the economy, because theyallow the work force to be deployed in a manner that yields greater totaloutput.However, our economic system does not always shift labor effectively from oneactivity to another. When people become unemployed, they may not find newemployment for an extended period of time. While they are unemployed, theyare not contributing their productive services to the economy. In some cases,the new employment opportunities are less productive and less remunerativethan previous jobs.The value of total economic production decreases if people are unemployed orare reemployed in less productive jobs that bring lower wages. At the locallevel, unemployed people have less money to spend. Lower spending reducesemployment in a variety of businesses. At the personal level, unemploymentcan cause great hardship and stress for unemployed individuals and theirfamilies. Extended periods of higher than normal unemployment are bad forthe unemployed individuals and the economy as a whole.571