An econometric analysis of the effect of forest dependence on the economic well-being of Canadian communities

This study examines how changes in economic activity in forestry, expressed as forest dependence at a census subdivision level (CSD), affected measures of economic well-being. The empirical models used to address this question were developed and estimated using random effects panel and two-stage least-squares estimators using data from the 1986, 1991, and 1996 Canadian census. The results illustrate the contribution of economic diversity to income growth and poverty reduction. However, the results also suggest that forest dependence was positively and significantly related to unemployment rates and to the incidence of poverty for people in private households. Forest dependence was shown to have little or no effect on median household income and the distribution of income within CSDs. These relationships were assessed while holding constant other factors expected to affect community level economic well-being, including economic diversity, trade exposure, and aggregate demand.