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2011-07-01 | Peer Reviewed

A Comparison of Welfare Effect of Timber Supply in Plain Areas and Mountain Areas

Xu, Jintao. 2011. “A comparison of welfare effect of timber supply in plain areas and mountain areas: Theory and evidence from collective forestry areas in China.” Forestry Economic Review 1: 94-106.
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This paper extends the basic model of Fausmann, and theoretically analyzes how forest tenure reform, tax reform, and market development affect timber supply.

By using the survey data of a village level, which is collected in the collective forest areas, we focuses on the different degrees of influence from various determinants of the timber supply in plains and mountain areas, and compares their different welfare changes. The result shows that, due to a more rational structure of property rights, a faster tax reform progress in forestry sector, and a higher degree of market development, these features explains why a smaller proportion of welfare loss in timber supply structure happens in plain areas where the resource endowment is low while the cost of forest management is also low, compared to in mountain areas. Therefore, the forestry governing departments should enhance the forest tenure reform and tax reform in mountain areas, and improve the timber production conditions, in order for them to play a greater resource advantage in timber supply.