The wood supply system is a dynamic and complex structure. Traditionally, key components of the system have been treated as stand-alone entities with very little regard to the performance of the overall system. The central component, the logging contractor, is usually viewed as a service provider and largely ignored. A value chain approach is an excellent tool to examine the primary stakeholders' contributions to the wood supply system. The value chain for forestry usually extends completely across the physical and political landscape, reaching into the most geographically and economically remote locations.

A conceptual model was developed depicting the wood supply system value chain and the socioeconomic impacts of a logging firm's cash flow contributions. Financial and production data were obtained from 93 independent logging firms from 18 Eastern US States. This analysis provided 690 business years of data, beginning with the 1988 financial year and concluding in 2005. In addition, three impact scenarios were modeled using Impact Analysis for Planning (IMPLAN) software to understand the effects of Hurricane Katrina. The first model addressed the economic impacts of a timber deficit from the landowner's perspective, the second introduced a disruption in the wood supply system from a logger's position in the value chain, and the third attempted to analyze the impacts of a mill closure.

Data analysis showed that operating costs have increased drastically during the study period with payment for services failing to provide adequate compensation to contractors. Furthermore, no significant per unit cost incentive was found to justify expanding the scale of operation. Smaller-volume producers appeared to have more ability to generate a profit on operations than their larger-volume counterparts. Cash flow analyses revealed much of the economic activity generated by the wood supply system remained in the local community. Some deficiencies of IMPLAN appeared upon examining the models introduced in this research.

Many rural communities across the Southeastern US are heavily dependent on production forestry. When the logging industry suffers, so does the entire economy of these regions. It is important to ensure that the socioeconomic impacts of the wood supply value chain for such communities remains intact.