Many of us in the forestry community were saddened to learn of the passing of Darius Adams back in December, 2023. The news was especially sober given that Darius and his colleague Richard Haynes, along with Joseph Buongiorno, had just won the Marcus Wallenberg prize – the premier award in the field of forestry.
It would be hard to overestimate the impact Darius had on the world of forestry economics. The TAMM model, which Darius developed with Richard Haynes, showed us how to model timber demand and supply in multiple markets, accounting for trade between the regions (Adams and Haynes 1980). Rather than treating prices as exogenous, Darius and Richard figured out how to make prices endogenous.
Endogenous prices were a real innovation. The U.S. Forest Service had a long history of using “gap” models to predict the gap between harvesting and growth. These models had no prices. They just calculated the gap between expected demand for industrial wood and supply. Supply was based on expected growth using historical biological conditions. If more demand was expected, the gap between supply and demand would widen. Consumption wouldn’t moderate if prices rose because there were no prices. Supply was static.
In markets, of course, there is no gap. If demand increases but supply doesn’t, prices increase, and vice-versa. Gap models had some pretty serious negative side effects, one of which was they validated Forest Service efforts to harvest too much timber. Worry over a looming timber famine propelled Teddy Roosevelt to create national forests and later led to the 1920 Capper Report and the 1933 Copeland Report. Both decried the poor state of private forest management in the United States, but the Copeland report was the most forceful about solutions, proposing that private land either be regulated more heavily or brought into the public domain (Clapp 1934).
Fortunately, those recommendations weren’t followed, but worry about the diminished state of US forest stocks was embedded in everything the U.S. Forest Service did. In the second half of the twentieth century, forest stocks were on the rise in the United States, yet the gap models consistently predicted too few forests would be available for rising demand (Clawson 1979). They motivated a national need for more timber harvesting in federal forests.
Of course, timber prices did rise over the twentieth century, the inevitable consequence of rising demand combined with old growth depletion (Berck 1979). Higher prices also spurred people to plant forests on private land starting in earnest the 1940s. Gap models missed that.
TAMM changed the conversation from gaps to markets and scenarios, providing policy makers with a much needed tool to evaluate the potential consequences of their policy decisions before they set the policy in motion. The timing of TAMM couldn’t have been better. In May, 1991, Judge Dwyer blocked Forest Service timber sales in the Northwest, setting into motion one of the great supply shocks of the last century – a 15% reduction in wood supply, a 62% increase in timber prices, and massive new demand for southern pine and Canadian lumber (Wear and Murray 2004). Lots of other things were happening at the same time, including the softwood lumber dispute with Canada followed by a massive building boom in the United States during the 1990s.
Economic models do not solve problems, but they do help people better understand them. They also help policy makers better understand how their decisions will affect market outcomes. That’s what TAMM did best. And when turbulent times hit the American wood economy in the 1990s, TAMM helped policy makers make better decisions, through reports for the Resource Planning Act (RPA) Assessment every 10 years and various other reports and papers.
If TAMM was all Darius did, it would have been enough. Along the way, however, Darius recognized one of the limitations of TAMM on the supply side. Foresters, you see, can adapt to changing market conditions in lots of ways, one of which is by changing the age at which trees are harvested. If prices are rising, for example, foresters can slowly extend rotation ages and increase the supply of wood from many intensively managed forests.
Furthermore, the tree planting revolution had been underway for decades, yet models like TAMM assumed tree planting was exogenous. Surely landowners were responding to prices not just by how they harvested trees, but also in where and when they planted them. Darius needed a way to make the age of tree harvesting and the area and intensity of forest planting in the US endogenous.
He and others managed to do this with a nifty new model developed in the late 1990s called FASOM. The FASOM developers had many good economists involved, but Darius left an unmistakable imprint on the forest sector components of this model. Today the model is widely used for policy analysis, in particular by the US Environmental Protection Agency to analyze critical policies that affect forests and forest management in the United States.
I knew Darius mostly through his writings and associates, although we did have a number of opportunities to interact over the years. His writings, about prices, timber markets, timber market modeling, and policy analysis were always filled with great insights. The economics world has moved on a bit from models like the ones Darius developed – to simple econometric approaches focused on identifying a causal relationship. However, complex structural models like the ones he developed still play a critical role by providing policy makers with all-important insights. As much as the academics amongst us are determined to look forward and devise new techniques and methods, sometimes it’s useful too to look back too.
Adams, Darius M., and Richard W. Haynes. 1980. “The 1980 Softwood Timber Assessment Market Model: Structure, Projections, and Policy Simulations.” Forest Science 26 (suppl_1): a0001-z0001.
Berck, Peter. 1979. “The Economics of Timber: A Renewable Resource in the Long Run.” The Bell Journal of Economics, 447–62.
Clapp, Earle H. 1934. “Major Proposals of the Copeland Report.” Journal of Forestry 32 (2): 174–95.
Clawson, Marion. 1979. “Forests in the Long Sweep of American History.” Science 204 (4398): 1168–74.
Wear, David N., and Brian C. Murray. 2004. “Federal Timber Restrictions, Interregional Spillovers, and the Impact on US Softwood Markets.” Journal of Environmental Economics and Management 47 (2): 307–30.