The difficulty in identifying a subsidy in the use of a natural resource : Canadian lumber imports

Abstract

Canadian stumpage price subsidies are claimed to be the cause of injury to the U.S. lumber industry. Legislative action has been taken which will impose a 15% export tax on Canadian lumber. This study examines the difficulty of identifying such a subsidy in the case of Canadian lumber imports, and more importantly, the difficulty of identifying subsidies in the use of natural resources as a whole. This is done through examination of resource depletion in the theory of the mine and the steady state timber management system. A model of the Canadian lumber market is then proposed. Examination of this model rejects the hypothesis that stumpage price systems are subsidies which injure the U.S. lumber industry.