Do Set-Asides Increase Plantation Establishment? The Case of U.S. Federal Timber Restrictions and Softwood Planting

To protect the endangered Northern Spotted Owl, the U.S. Fish and Wildlife Service established extensive conservation areas across the Pacific Northwest (PNW). While this policy effectively contributed to the preservation of an endangered species, it also generated significant short- and long-term impacts on the U.S. forestry market. This study investigates the impact of federal timber harvesting restrictions in the Pacific Northwest in the early 1990s on the U.S. softwood market, particularly on softwood planting in the South. By constructing and analyzing a panel dataset covering 537 counties in seven southern U.S. states from 1977 to 2007, the research finds that timber-harvesting restrictions triggered by the listing of the Northern Spotted Owl as threatened led to a significant increase in softwood planting rates in the Southern U.S. Previous studies have shown that set-asides can shift timber harvesting from one region to another and raise prices in the short term. This study illustrates a different outcome of set-asides: tree planting. We argue that accounting for long-term investment responses, such as tree planting, is critical when evaluating the impacts of forest policies, as these can significantly alter estimates of net carbon balance and overall market outcomes.