DEMAND FOR SAWNWOOD OF WELL KNOWN AND LESSER KNOWN SPECIES IN PENINSULAR MALAYSIA

Abstract

Declining timber resources are forcing tropical timber producing countries to develop markets for "lesser known" species (LKS). This paper provides a quantitative analysis of the effects of relative prices, output of end-use industries (construction and mouldings) and technical change (residual trends) upon the domestic demand for sawnwood of well known species (WKS) and LKS in Peninsular Malaysia during 1979 through 1989. A twooutput cost function is developed to analyze demand for sawnwood as derived from cost minimization by the end-use industries. Regression results indicate that the consumption of sawnwood by the construction and moulding industries was significantly influenced by relative prices, output of end-use industries and technical change. Future increases in domestic consumption of LKS depend on their continued price advantage offsetting underlying trends away from their use.