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<p>Rollback factors, or “Room to Bid” adjustments, are used by public forest agencies to modify advertised timber prices in response to market conditions. It offers a practical, low-cost tool for short-term market adjustment, allowing agencies to adapt to economic fluctuations without overhauling their appraisal systems. This study analyzes Michigan Department of Natural Resources (DNR) timber sale data from 2016 to 2025 to evaluate how different rollback factors affect key timber sale outcomes, including bid premiums, pricing alignment, sale proportion, bidder participation, volume sold, and average price. Using sales data (n = 4,729) and pairwise statistical tests across rollback categories (15%, 25%, 35%, and 45%), we found that the 45% rollback significantly increased bid premiums and sale proportion but also led to substantial undervaluing and lower average prices. In contrast, the 25% rollback consistently produced balanced outcomes, with moderate premiums, competitive participation, and better alignment with fair market estimates. These results highlight that while rollback factors serve as a flexible, low-cost pricing tool, their application involves tradeoffs: higher rollbacks boost participation and liquidity but risk reducing the revenue and the undervaluation of sales. Careful calibration is essential to optimize these competing goals.</p>

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Rollback Factors and their Influence on Timber Sale Outcomes in Michigan

  • 期刊论文

  • 出版模式：

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  • 发表日期：

    2025年10月18日

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  • Jagdish Poudel,
  • Basanta Lamsal

摘要

Rollback factors, or “Room to Bid” adjustments, are used by public forest agencies to modify advertised timber prices in response to market conditions. It offers a practical, low-cost tool for short-term market adjustment, allowing agencies to adapt to economic fluctuations without overhauling their appraisal systems. This study analyzes Michigan Department of Natural Resources (DNR) timber sale data from 2016 to 2025 to evaluate how different rollback factors affect key timber sale outcomes, including bid premiums, pricing alignment, sale proportion, bidder participation, volume sold, and average price. Using sales data (n = 4,729) and pairwise statistical tests across rollback categories (15%, 25%, 35%, and 45%), we found that the 45% rollback significantly increased bid premiums and sale proportion but also led to substantial undervaluing and lower average prices. In contrast, the 25% rollback consistently produced balanced outcomes, with moderate premiums, competitive participation, and better alignment with fair market estimates. These results highlight that while rollback factors serve as a flexible, low-cost pricing tool, their application involves tradeoffs: higher rollbacks boost participation and liquidity but risk reducing the revenue and the undervaluation of sales. Careful calibration is essential to optimize these competing goals.