A study shows that Hurricane Michael destroyed forests in Florida and Georgia, paralysing wood-processing plants and triggering a sharp fall in timber prices.

Hurricane Michael severely affected US timber reserves, destroying forests, paralysing the work of wood-processing mills and triggering a sharp fall in timber prices. In the worst-affected regions of Florida and Georgia, the growing stock in forests fell to as little as 22.7% of the volume present before the storm; as a result, hardwood prices fell by 77%, pine by 9% and pulpwood by 6%. A surge in logging to salvage the remaining timber flooded supply chains, creating chaos in the market for timber assortments.

The figures are taken from the review "Assessing hurricane impacts on timber markets in the south-eastern United States: the effects of Hurricane Michael" (a peer-reviewed study by experts O. Lamica and R. Parajuli (North Carolina State University) in collaboration with C. Brandeis of the US Forest Service).

Using a Regression Discontinuity in Time model and twice-monthly timber price data from the hurricane-affected and surrounding regions, the research team established the hurricane's direct impact on timber prices. "The findings show that after Michael, prices across the region fell by 6% for pine pulpwood and by 9% and 77% for pine sawtimber and hardwood sawtimber respectively," the scientists note. In unaffected or less affected regions, the storm's impact on prices was more variable and differed by assortment.

The largest price falls were observed in the Panhandle (Florida) and the south-west of the state of Georgia, where the 2018 hurricanes destroyed vast areas of forest. Because hardwood sawtimber production was limited — only 10 hardwood sawmills were operating in the storm-affected regions of Florida, Georgia and Alabama — the sawmills were unable to process the sudden volume of sawlogs, and hardwood sawtimber prices fell sharply. The pine timber market also suffered upheaval, as the volume of "salvaged" timber made up more than half of the remaining pine volume in the regions worst affected by the hurricane.

The shock Michael caused in the timber market spread far beyond the disaster zone. In surrounding markets, pine sawtimber prices fell by as much as 13% and pine pulpwood prices by as much as 16%, while prices for pine by-products and sawtimber in the neighbouring region fell by as much as 95%, as mills bought far cheaper wood from the hurricane-affected forests.

It should be stressed that in regions untouched by the hurricanes prices rose, as mills increased output to meet renewed demand; as a result, hardwood sawtimber prices rose by 4% in part of Georgia, while in South Carolina hardwood pulpwood prices rose by 11%. "The intensity of catastrophic weather events such as hurricanes is forecast to increase across the south-eastern United States," the study's authors warn. "Since productive forests cover almost half of this region's territory, periodic powerful hurricanes frequently disrupt timber supply and destabilise local markets."

Michael damaged forests across 2.5 million ha; 47 million m³ of timber had to be removed, while a further 42.5 million m³ of storm-damaged timber could not be extracted, because forest roads in the storm-affected regions had been destroyed and the soil was waterlogged. In Florida alone the storm destroyed around 40,000 buildings, causing losses of roughly USD 25 billion. In the forests of the southern United States, Michael left behind a huge quantity of felled and broken trees and completely devastated ground cover.

The study's authors note that their findings "reflect the impact on timber market dynamics immediately after a catastrophic hurricane and offer detailed perspectives for forest managers, landowners and investors when planning further work in at-risk timber supply chains and in ensuring the sustainable development of forests". As climate change drives more intense and more frequent hurricanes, the conclusion is clear: the next major hurricane could bring both destruction and a series of shocks that will "test" the resilience of the forestry and timber industries across the southern United States.

Further information: Austin Lamica, Rajan Parajuli, Consuelo Brandeis, Assessing hurricane impacts on timber markets in the south-eastern United States: the case of Hurricane Michael, Forest Policy and Economics.