Regulating the Old Frontier: How Politics and Markets Shape Forest Outcomes in the Contemporary United States

Abstract

This thesis investigates how the current structure of economic incentives – particularly the omission of non-market ecosystem services from financial and economic decision-making – shapes forest management outcomes across the United States. Drawing on economic theory and utilizing panel data from 2001 to 2023 covering all fifty U.S. states, the analysis examines how political alignment, market conditions, and regulatory intensity influence patterns of annual tree cover growth and loss. A fixed-effects regression framework is used to isolate the effects of commodity price fluctuations, partisan preferences, and institutional restrictions on forest outcomes.

The results reveal that neither lumber nor gasoline prices significantly predict forest loss in aggregate. However, from the data, we learn that the influence of both economic and political factors is strongly conditional on regulatory context. In states with weak forest regulation, Republican political alignment is associated with significantly higher forest loss, while in states with strong regulation, this effect disappears. Similarly, market responsiveness to timber prices is greater in weakly regulated jurisdictions, indicating that institutional design can also buffer ecological outcomes from short-term economic pressures.

The findings in this paper highlight the importance of developing regulatory institutions to promote environmental sustainability. When ecological benefits such as carbon storage and biodiversity remain unpriced, private decision-making often fails to align with long-term societal goals. Strengthening regulatory safeguards and explicitly integrating non-market values into economic planning are two critical steps toward ensuring that U.S. forests remain resilient, productive, and ecologically valuable in the long run.