El Niño, Ice Storms, and the Market for Residential Fuelwood in Eastern Canada and the Northeastern U.S

Extreme weather events such as the ice storm that affected eastern Canada and the Northeastern US in January of 1998 have significant impacts on both human populations and forests. One of the questions currently facing climate scientists is whether or not better forecasting of such events would lessen the economic impacts borne by households, industry, agricultural producers and the public sector when such weather events occur. This case study examines the economic impacts of the ice storm on the residential market for fuelwood. It is hypothesized that demand for fuelwood will increase due to the failure of non-wood heating sources during the ice storm. In addition, damage to trees in the region should increase the supply of fuelwood; the net effect of these outward shifts of supply and demand on price is not known. A household level survey administered to over one thousand households indicates that less than half of the households in the affected region currently rely on wood burning technologies as a source of heat for their homes. However, those households with wood burning technologies were better able to manage during the ice storm. The main policy implication of better forecasting of extreme weather events is the ability of households to alter or substitute home heating strategies and technologies in addition to other mitigative strategies such as storing food etc. In addition, forest managers or forest product producers who have information regarding extreme weather events have the option to undertake various management strategies to lessen the economic and biophysical impacts of ice storms on forests. Forest managers and woodlot owners may also enter or expand into the market for residential fuelwood when the production of other forest produce such as maple syrup and veneer are hindered by ice storm damage.