Estimating the Economic Impacts of Mountain Pine Beetle Disturbance Using a Regional CGE Model

A hybrid data collection method involving primary and secondary data is used to develop a regional computable general equilibrium model. The region-specific computable general equilibrium follows the Johansen solution technique and is used to simulate the potential economic impacts resulting from a Mountain Pine Beetle infestation in the Northern Interior Forest Region of British Columbia, Canada. Under Scenario 1 a 10% reduction of the timber supply in the Morice Timber Supply Area leads to decreased economic activity across all sectors of the economy and has serious implications for the future stability of the small timber dependent region. A 10% increase in visitor activity can partially, but not completely offset the negative impacts of a 10% decrease of the timber supply in the Morice TSA. Increasing agricultural exports by 10% benefits all sectors of the economy, but can only minimally offset any negative impacts associated with a 10% reduction of the timber supply in the Morice TSA. Scenario analysis using alternative mitigation strategies involving all sectors of the economy may help inform decisions regarding future regional development policies.