Some Timber Product Market and Trade Implications of an Invasive Defoliator: The Case of Asian Lymantria in the United States

reported that the decline in forest growth could lead to annual US timber market losses from $2.3 billion to $3.8 billion. [1] Governments and the private sector also spend substantial amounts on research and development of technologies to monitor, detect, and control invasive pests. Annual expenditures by the US federal government on all agricultural pests increased from $500 million in the mid-1990s to over $1 billion in fiscal years 2001 to 2006 (USDA Economic Research Service 2008, USDA 2008). Between fiscal years 1995 and 2006, expenditures for exclusion, monitoring, and management rose from $400 million to over $800 million, and expenditures in response to outbreaks increased from $20 million to $530 million. An additional $500 million/ year was spent on average, fiscal years 2006– 2008, by the Agricultural Research Service, State Research and Economic Research Service on research activities related to pest and disease outbreaks (USDA 2008). The US Forest Service alone had a budget of $128 million for its invasive species program in 2008 (Office of the Whitehouse 2008). This article summarizes a study of some of the potential economic impacts from two possible invasive pests: the nun moth and the Asian variety of the gypsy moth. The article outlines the methods and synthesizes the key findings. The study’s goal was to compare the cost of the phytosanitary measures taken to limit imports of larch from Siberia and the Russian Far East, a principal source of invasion risk (US Forest Service 1991), with the expected timber market losses from a potential invasion. We quantified the trade that would occur in the absence of significant barriers to entry and how much trade would occur under alternative measures. In addition, we determined the effects of a global policy response to a successful invasion in the United States. The models developed to answer such questions should be useful for making risk assessments for other pests and enlighten areas needing additional research. Forests and International Commerce Trade and travel have long been recognized as causes of introduction of invasive pests (Elton 1958, Darwin 1859, Jenkins 1996, Haack 2001, Tkacz 2002, McCullough et al. 2006). From 1950 to 2004, world trade grew an average 5.9% per year (Hummels 2007). From 2002 to 2006, the freight volume carried by ships arriving at US ports increased by over 20%, well above the 12% increase in US gross domestic product over the same period (Figure 1). Visits to the United States by nonresidents have also grown in recent years, although not at the same rate as shipping. Studies of insect interceptions and establishment in the United States (Work et al. 2005, Haack 2006, Liebhold et al. 2006, McCullough et al. 2006) confirm the roles of increased overland, maritime, and air trade of wooden goods and passenger travel as potential pathways for the introduction of nonindigenous insect species. The severe threat that exotic pests pose to forests has led to a variety of measures, such as phytosanitary regulations—fumigation and heat treatments, debarking, visual inspections, phytosanitary certificates,and more—or import bans (New Zealand Forest Research Institute 1999, Roberts et al. 1999). In 2001, the European Union imposed restrictions on imports of coniferous solidwood packing material from the United States, potentially infested with the pine wood nematode. In 1997, the US District Court for the Northern District of California temporarily enjoined the issuing of import licenses by the USDA Animal and Plant Health Inspection Service (APHIS) for logs from New Zealand and Chile, in response to environmental organizations suing APHIS for allowing the importation of unprocessed wood products (Collins 1999). Although they have clear benefits in reducing the risk of damage to forest resources, trade measures to prevent pest arrivals also reduce the benefits from trade (Margolis et al. 2005). Importing countries may have to forego cheaper foreign products and raw materials (Roberts et al. 1999, Mumford 2002). Exporting countries may lose access to markets (Li et al. 2007, Turner et al. 2007). Many studies suggest that restricted trade is associated with poor economic performance (Mankiw et al. 1992, Edwards 1993, Frankel and Romer 1999) and lower welfare than would prevail under free trade. Phytosanitary and regulatory approaches to limiting introductions sometimes fail. Monitoring, eradication, and control measures are therefore necessary to fight pests once they arrive in the country. These measures have costs, accruing to government and private owners, for periodic surveys, eradication efforts, monitoring, sanitation cutting of trees in areas of infestation, and altering forest management activities to reduce risks of establishment or growth losses (Turner et al. 2004). The following pages address three questions in the context of the potential arrival, Figure 1. US trade, travel, and gross domestic product, 1997–2006, expressed as an index (2002 100). A 20-ft equivalent unit (TEU) is the volume equivalent of one 20 8 8 ft (6.1 2.44 2.44 m) cargo shipping container (North American Transportation Statistics 2007, US Department of Transportation Maritime Administration 2007, US Department of Commerce Bureau of Economic Analysis 2007). 410 Journal of Forestry • December 2008 establishment, and spread of the Asian gypsy and nun moths in the United States: (1) What is the potential effect on timber product markets of these invasive pests? (2) Is the current ban on log imports from the Russian Far East to prevent pest arrival likely to be effective? (3) Does the potential cost of these two pests in terms of forest loss outweigh the costs of trade reduction and economic growth due to current phytosanitary control