Battlepanda: Thinking Big with small logs


Always trying to figure things out with the minimum of bullshit and the maximum of belligerence.

Tuesday, January 10, 2006

Thinking Big with small logs

This is a good example of what I call a paradigm lag -- Our timber industry is set up for bigger trees because initially bigger trees are plentiful and processing smaller trees does not make economic sense. As big trees get logged out, standard economic theory predicts a smooth transition to using smaller trees as the supply of big trees dwindle and price is driven up. But for individual timber producers with equipment set up to deal with bigger trees, the profit-maximizing decision is to keep chasing the increasingly rare big logs rather than invest in finding ways to utilize plentiful smaller logs. John of Dymaxion World used the graph below to illustrate what happens to oil production as prices increase, but it might be used to illustrate what happens as any non-renewable resource is drawn down -- new technology come online not necessarily to stretch out the supply or find new supplies but often to tap existing supplies at a faster rate.
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The good news is, there is a movement afoot to better utilize the small logs that are often just burnt or left amongst maturing trees to act as kindling for forest fires. These new projects are often not motivated completely by pecuniary factors, but I hope that they will turn out to be profitable and spearhead a paradigm change in the timber industry.