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In many countries, timber harvesting from natural forests is accompanied by social conflict that governments seek to mitigate, often through the introduction of policy changes that reduce the forest industry’s access to natural forest wood. Forest policy changes often have important implications for businesses and workers dependent on forest resources; however, the social impacts of such changes remain relatively unexplored. We conducted an ex post facto assessment of social impacts experienced by members of the forest industry in the Australian state of Western Australia following the introduction of three forest policy changes between 1999 and 2004. Results indicate that the process by which forest policy decisions were made, the nature of the resulting policy changes, and the actions people took in response, together contributed to three key negative social impacts: uncertainty, a perception of injustice, and financial stress. These impacts in turn led to diminished perceptions of industry security, thus discouraging business owners from investing in the industry, rather than encouraging investment, which was a key goal of the forest policy changes. The results highlight the importance of recognizing, avoiding and mitigating negative social impacts associated with policy changes, as these impacts can hinder the realization of policy goals.