Economic impacts of a reduction in the annual allowable cut and in the price of forest products on the Foothills Model Forest regional economy are examined. A two-sector computable genera1 equilibrium model is developed for the region to do this task. The results indicate that these changes cause significant negative impacts on the forest sector and on the local economy. Results show that other sectors of the economy will expand in response to the above changes in the forest sector. However, the expansion cannot offset the reduction in the forest sector and thus local communities sustain reduction in their income. The results are sensitive to the assumptions about markets for factors.

economic impact analysis, CGE modeling, regional, economics, community stability