Welfare Gains from Wood Preservatives Research
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The economic productivity of publicly funded wood preservatives research from 1950 to 1980 exemplifies public research in the forest product industries. We find a high internal rate of return for wood preservatives, nearly 300 percent. The research investments would not have been made by private industrial investors, however, since the welfare gains are not captured by producers. This provides justification for government involvement in research. The marginal internal rate of return is negative, indicating that the internal rate of return would have been even higher with less funding.