FOREST SECTOR MODELING CONFERENCE
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TOPIC
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Forest Sector Modeling: State-of-the-Art and Future Challenges in
an Expanding Global Marketplace
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DATES
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November 17, 2008: Reception & Dinner
November 18-19, 2008: Conference
November 20, 2008: Field Trip
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LOCATION
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University of Washington Botanic Gardens • Center for Urban
Horticulture
3501 NE 41st
Street
Seattle, Washington 98105 • USA
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AGENDA
0700 Breakfast:
Northwest
Horticulture Society Hall Section C
0800 Welcome: Northwest Horticulture Society Hall Sections A & B
B. Bruce Bare,
Dean, University
of Washington College of Forest
Resources
0815 Keynote
Speaker
Birger Solberg, Norwegian University of Life Sciences
Presentation
0900 Comments
0910 Region
1 - State-of-the-Art:
Europe
Anne
Toppinen, University of Helsinki Presentation
0940 Region
2 - State-of-the-Art:
Asia
Hiroyasu Oka, Forestry and Forest Products Research Institute Presentation
1010 Comments
1020 Break
1050 Region
3 -
State-of-the-Art: Southern Hemisphere
James Turner, New Zealand Forest Research Institute Presentation
1120 Region
4 - State-of-the-Art:
North America
David Wear, USDA Forest
Service Southern Research
Center Presentation
1150 Comments
1200 Lunch:
Northwest Horticulture Society Hall Section C
1330 CONCURRENT
SESSIONS 1A
Using Models for Policy I: Northwest Horticulture Society Hall Section A
Profit Persistence in Globalising Forest
Industry: Econometric Analysis with Panel Data
Susanna Laaksonen-Craig, British Columbia Ministry of Forests and Range Presentation
The
North American Softwood Lumber Sector: Market Modeling and Policy Analysis
Runsheng Yin, Michigan State University Presentation
Foreign Direct Investment Outflows
in Forest Industry: The Case of Importing and
Exporting Countries
Daowei Zhang,
Auburn University Presentation
Bioenergy I: Northwest Horticulture Society Hall Section B
Possible
Reductions of Greenhouse Gas Emissions by the Use of Wood Fuels in Norway
Hanne
Sjølie, Norwegian University of Life Sciences
Presentation
Energy
vs. Material: Modeling Alternative Uses of Wood to Assess Economic Impacts
Peter Schwarzbauer, University of Natural
Resources & Applied Life Sciences Presentation
Potential
Biomass Demand Impact in the U.S.
South
Robert
Abt, North Carolina State University
Presentation
Land Use in Forest
Sector Modeling: Isaacson Classroom
The
European Forest and Agricultural Sector
Optimization Model - EUFASOM
Uwe
Schneider, Hamburg University
Presentation
Development and Application of An
Integrated Forest and Agricultural Sector
Model For Use in Policy Analysis for Greenhouse Gas (GHG) Mitigation and
Adaptation: Lessons Learned and Future
Opportunities
Ralph
Alig, USDA Forest
Service Pacific Northwest Research Station
Presentation
The
Impact of Second Generation Biofuels on the Global Forest
and Land-use Sectors
Uwe
Schneider, Hamburg University
Presentation
1500 Break
1530 CONCURRENT
SESSIONS 1B
Models Measuring Impacts on Forest Land:
Northwest
Horticulture Society Hall Section A
Impact
Analysis of Endangered Species Act on Stock Market Return in US Companies
Xianchun
Liao, Mississippi State University
Presentation
Integrating
Non-Timber Values into Market-Based Forest
Valuation Models
Bret
Vicary, James W. Sewall Company
Presentation
Modeling
the Impact of Carbon Trading Legislation on New
Zealand’s Plantation
Estate
Bruce
Manley, University of Canterbury
Presentation
Bioenergy II: Northwest Horticulture Society Hall Section B
Increased
Use of Bioenergy: Impacts and Opportunities for the Norwegian Forest
Sector
Erik
Trømborg, Norwegian University of Life Sciences
Presentation
Incorporating
Wood-Based Bio-Energy Models into FSMs
Larry
Mason, University of Washington
College of Forest Resources
Presentation
Economy-wide
Impact Analysis of Policies to Promote
Forest Biomass and Bioenergy in Florida
Ming-Yuan Huang, University
of Florida
1700 Adjourn
0700 Breakfast:
Northwest
Horticulture Society Hall Section C
0800 Housekeeping
Comments: Northwest
Horticulture Society Hall Section A
0830 CONCURRENT
SESSIONS 2A
Using Models for Policy III: Northwest Horticulture Society Hall Section A
An Economic Analysis of Mountain
Pine Beetle Impacts in a Global Context
G.
Cornelis van Kooten, University of Victoria
Presentation
Agent-based Forest
Sector Modeling for Investment and Policy Decisions Following Natural
Disturbances
Olaf
Schwab, University of British Columbia, Department of Forestry
Presentation
Simulation Analyses of the Japanese
Wood Market
Satoshi Tachibana,
Forestry and Forest
Products Research Institute Presentation
Elasticities in Models:
Northwest Horticulture
Society Hall Section B
Derived Long-Run and Short-Run
Relation of a Lumber Market
Nianfu
Song, Louisiana State University Presentation
Integration of Disaggregated
Elasticity Estimates into the SubRegional Timber Supply Model
Jui-Chen
Yang, RTI International
Presentation
Modeling Pine Pulpwood Supply and
Demand in the US
South: A Structural and Non-structural Approach
Xianchun Liao, Mississippi State University
Presentation
Trade and Globalization: Northwest Horticulture Society Hall Section C
The Impacts of Increasing Russian
Roundwood Export Tariffs on the Forest Sector
Markets
Anne Toppinen, University of Helsinki Presentation
Development of a Conceptual Model of
International Marketing Strategies and its Application in the Brazilian Pulp
and Paper Sector
João Carlos Garzel Leodoro da Silva, Universidade Federal do Parana
Presentation
Impact of Anti-Dumping Policy on Wooden
Bedroom Furniture Imports from China
Changyou Sun,
Mississippi State University
1000 Break
1030 CONCURRENT
SESSIONS 2B
Using Models for Policy IV: Northwest Horticulture Society Hall Section A
Scenario Analysis of the Impact of
Potential Measures to Prevent Import of Illegal Wood and Wood Products
Alexander
Moiseyev, European Forest
Institute Presentation
Modeling the Implications of Illegal
Logging for the New Zealand
Forest Sector
James
Turner, New Zealand Forest Research Institute Presentation
European
Scale Forest
Resource Modeling at High Resolution Based on Inventory Data
Gert-Jan Nabuurs,
Alterra, Wageningen University
Presentation
Forest Sector Models I: Carbon Accounting: Northwest Horticulture Society Hall Section B
Carbon Taxes, Carbon Accounting and
Forest Biomass Burning for Power Generation in British Columbia
Kurt
Niquidet, University of Victoria, REPA Research Group
Presentation
Assessing Potential Carbon
Sequestration-Harvest Trade-offs With a Dynamic Regional Market Model of Public
and Private Timberlands in Western Oregon
Darius
Adams, Oregon State University
Presentation
The Implications for the Timber
Sector of US Biofuel Mandates
Roger Sedjo,
Resources for the
Future
Presentation
Forest Sector Models II: Northwest
Horticulture Society Hall Section C
Wood Use Increase in Construction
Sector; Market, Forest Management and Climatic
Impacts - Towards an Integrated Modeling Framework
Henna
Lyhykäinen, University of Helsinki
Presentation
The U.S.
Forest Assessment System: Modeling and
Forecasting the Forest Sector in the United States
David Wear,
USDA Forest
Service Southern Research
Center
Presentation
1200 Lunch
1330 CONCURRENT
SESSIONS 3
Modeling Impacts of Climate Change:
Northwest Horticulture
Society Hall Section A
Consequences of Climate Change for
the Global Forest Sector
Joseph
Buongiorno, University of Wisconsin
Presentation
Finnish
Forest
Sector Model: Analyzing Bioenergy and Climate Policy Implications
Lauri
Hetemäki, Finnish Forest Research Institute
Presentation
Potential
Forest Sector Impacts of Climate
Change on Douglas-fir Forests of the United
States Pacific Northwest
Gregory Latta,
Oregon State University Presentation
Forest Sector Models III: Northwest Horticulture Society Hall Section B
Structure
of New U.S. Forest Products Module (USFPM) in GFPM
Andrew
Kramp, USDA Forest Service Forest Products Laboratory
Presentation
Accounting
for Uncertainty in a Forest Sector Model using Monte Carlo Simulation
Maarit Kallio, Finnish Forest Research Institute
Modeling
and Projections of Forest Resources in Japan
Hirofumi
Kuboyama, Forestry and Forest Research Institute
Presentation
1500 Break
1530 Concluding
Panel
Contemporary
Directions for Forest Sector Modeling by
Rapporteurs
1630 Adjourn
Profit Persistence
in Globalizing Forest Industry: Econometric Analysis with Panel Data
Susanna Laaksonen-Craig1 * and Anne Toppinen2
1 Adjunct professor, University of Toronto, Faculty of
Forestry, 33 Willcocks St., Toronto, ON M5S 3B3, Canada.
2 Professor, Department of Forest Economics, University
of Helsinki, P.O. box 27, 00014 Helsingin Yliopisto, Finland.
Email: susanna.laaksonen.craig@utoronto.ca, and anne.toppinen@helsinki.fi
* Corresponding author
There is a structural change going on in the forest products industry in
the form of consolidation, internationalization and rise of FDI due to
saturation of the traditional markets in North America and Europe and a simultaneous growth in the emerging countries.
Obtaining benefits through economies of scale and scope and greater
international diversification is in the forest industry inevitably accompanied
by greater supply chain complexity and exposure to new risks, including
vulnerability to companies corporate social responsibility (CSR) image. Despite
of internationalization and cost minimization strategies, forest industry has
on average during the 2000s suffered from low profitability and declining real
prices of paper products. Furthermore, theoretically excess profits should be
vanishing over time in a competitive environment when new competitors enter the
market reducing profit-margins of existing firms until the profits reach the
competitive rate. However, anecdotal evidence has suggested that some companies
in the forest industry are still highly profitable despite of challenging
market environment, and the topic of this paper is to analyse this phenomenon. This
study models profit persistence and scale economies of globalizing forest
industry using panel data from 49 companies in the US,
Canada, Europe
and in the group of emerging countries between years 1996-2005. Size and
profitability of forest industry companies were only weakly related, and there
were also clear geographical and period specific differences in the data.
Measurement of scale economies is also problematic due to highly profitable
consumer packaged goods firms in the industry. Time series-cross section unit
root tests indicated that on the global scale there were no persistent firm-specific profits
among the largest forest industry companies, but there was some evidence of
geographical differences regarding Canadian companies. In the future studies,
interplay between economic, environmental and social sustainability issues in
the companies, which is not yet well understood should be analysed in more
depth.
Key words: Persistency of profits, scale economies, panel
data, unit root tests, forest industry
The North American Softwood Lumber Sector: Market Modeling and Policy Analysis
Runsheng Yin1,
and Jungho Baek2
1 Department
of Forestry, Michigan
State University,
Email: yinr@msu.edu, Phone:
(517) 432-3352, Fax: (517) 432-1143
2 Department
of Agribusiness and Applied Economics, North Dakota State
University, Email: jungho.baek@ndsu.nodak.edu, Phone:
(701) 231-7451, Fax: (701) 231-7400
The continued, and often
heated, dispute over Canadian exports of softwood lumber to the United States has rekindled
the following fundamental questions: How the U.S. restriction(s) have affected
lumber prices and imported volume and what are the likely welfare impacts on the
involved parties? To answer these questions properly, it is crucial to
adequately characterize the multi-facets and dynamic linkages of the North
American softwood lumber market. This is because other than the trade
restrictions, many variables, such as housing starts, exchange rates, and
mortgage rates, also influence the market relationships; if some of these
variables are excluded and thus their effects cannot be properly accounted for,
then analytic results and policy implications will be incomplete or biased.
Therefore, we propose a session to discuss alternative approaches to modeling
the softwood lumber market in North America and assessing the potential impacts
of U.S. trade restrictions
as well as the outlook of the U.S.
lumber industry in light of the current domestic housing crisis and the
industry’s globalization. The following topics will be covered in the session:
(1) the strengths and weaknesses of structural and non-structural modeling
methods; (2) the selection and incorporation of relevant variables; (3) the
ongoing changes along the softwood lumber supply chain; and (4) the adoption
and consequence of alternative trade restriction schemes.
Foreign Direct Investment Outflows
in Forest
Industry: The Case of Importing and Exporting Countries
Rao V. Nagubadi
and Daowei Zhang
Forest
Economics & Policy, School
of Forestry and Wildlife
Sciences, 602 Duncan Drive,
Auburn University, AL
36849-5418
phone: 334-844-1052, Fax: 334-844-1084, email:
nagubve@auburn.edu
The authors gratefully acknowledge the financial
assistance for this research project from the Southern Research Station, UDSA
Forest Service, Research Triangle Park,
NC 27709. The authors acknowledge helpful suggestions
from Yanshu Li, and Yaoqi Zhang. The
usual caveats apply.
Foreign direct investment in
forest products sector has steadily increased over the past two decades and
this has important implications for the international forest product trade
flows. In this study, we examine the determinants of foreign direct investment
(FDI) outflows from two major forest product importing countries (U.S. and
Japan) and two major forest product exporting countries (Canada and Sweden)
using both panel data analysis methods and seemingly unrelated regression
equations (SURE) models. A complementary relationship is found between forest
products exports and FDI outflows for the U.S., but not for Japan.
A substitution relationship exists between the forest products imports and FDI
outflows for Sweden, but not
for Canada.
Exchange rate depreciation of the host countries significantly enhances the FDI
outflows from the forest product importing countries but it has no impact on
those from the exporting countries. Per capita income, cost of capital, and
cost of labor in the host countries have an impact on FDI outflows from the
importing countries. In general, resource-seeking motives for the FDI outflows
from importing countries and market-seeking motives for those from the
exporting countries are not conclusive, although those are the cases for Japan and Sweden.
Possible reductions of greenhouse gas emissions by the use
of wood fuels in Norway
Hanne Sjølie1 *, Erik
Trømborg1, Birger
Solberg1 and Torjus Bolkesjø2
* hanne.sjolie@umb.no
1 Department
of Ecology and Natural Resource Management, Norwegian University
of Life Sciences, Aas, Norway
2 Point
Carbon, Oslo, Norway
Norway has objectives of increasing the use of bioenergy to
heating purposes. But neither the costs of implementing more bioenergy, nor the
effect on the greenhouse gas (GHG) emission account are clear.
The study analyses
first the avoided GHG emissions from substituting one energy unit of fossil
fuel with forest-based bioenergy (wood fuel) in several heating technologies.
Further, the effect of a policy mean to increase the use of wood fuels in a
varying economic framework in Norway
is investigated. The results are combined to display the effects of the policy
mean to reduce GHG emissions from heating in Norway. The analysis is done with
use of a partial, spatial equilibrium model of the Norwegian forest sector,
wood fuels included, to study its economic potential.
Based on model runs
we conclude that 20 % support to district heating installations may reduce the
GHG emissions from heating with 25 %, to a cost of 8 € /tonne CO2e.
A 50 % subsidy level may halve the GHG emissions from heating, to a cost of 21
€/tonne CO2e. These costs are lower than many other measures taken
for reducing GHG emissions, but depend heavily on the future energy price, and
augment rapidly with increasing energy price.
Energy vs. Material: Modeling Alternative Uses of Wood to
Assess Economic Impacts
Todor Balabanov3, Peter Schwarzbauer*1
Wolfgang Schwarzbauer3, and Tobias Stern2
* Corresponding Author
1 University
of Natural Resources and Applied Life Sciences Vienna,
Institute of Marketing & Innovation, Feistmantelstr.
4, A-1180 Vienna
phone: +43-1-47654-4416,
fax: +43-1-47654-4562, e-mail: peter.schwarzbauer@boku.ac.at
2 Competence
Centre for Wood Composites and Wood Chemistry, Market Research Group, Vienna
3 Institute
for Advanced Studies Vienna,
Department of Economics and Finance
The goal of this paper is to
address the market and macro-economic effects of alternative uses of wood – for
energy and for material purposes in Austria. The modelling
system developed for this purpose consists of the combination of two different
models, a forest-sector specific and a macroeconomic model. This model
combination aims at the quantification of demand, supply, trade and prices of
wood products (including wood for energy) and their macroeconomic impacts. The
ATGEM-E3 (Austrian General Equilibrium Model for Energy-Economy-Environment
interactions) follows a computable general equilibrium approach (CGE), whereas
in FOHOW (the simulation model of the Austrian forest sector; Forst- und
Holzwirtschaft) the forest sector is modelled as a whole (system), from forest
growth to the use of paper. Macroeconomic effects of forest sector-specific
alternative scenarios under different policy assumptions are presented, in
particular the trade-off between losses in added values of the wood processing
industries vs. national economic costs and benefits achieved from the
substitution of energy produced from fossil resources by such from renewable,
especially wood-biomass resources.
Keywords: General Equilibrium Model, Forest
Sector Simulation Model, Energy, Energy Policy, Economic Impacts
Potential Biomass Demand Impact in the U.S. South
U.S. South
Robert C. Abt, Robert
H. Beach, Frederick W. Cubbage, Christopher Galik, Yun Wu, and Jui-Chen Yang Senior authorship is not
assigned.
*Corresponding Author
Food & Agricultural
Policy Research Program, RTI International, 3040 Cornwallis Road, PO Box 12194, Research
Triangle Park, NC 27709-2194
phone: 919-485-5579, email: rbeach@rti.org
There
has been significant resurgence of interest in bioenergy in recent years.
Increasing renewable portfolio standards for electricity generation as well as
the prospect of state, regional, and federal policies and programs to limit
greenhouse gas emissions may induce utilities to co-fire biomass with coal or
construct dedicated bioelectricity plants. In addition, the Energy Independence
and Security Act of 2007 mandated that U.S. fuel producers use at least 36 billion gallons of biofuels annually by
2022, including at least 16 billion gallons of cellulosic ethanol. These
developments provide potential new market opportunities for forest residues and
small-diameter material from thinning or other forest management activities.
However, increased competition for forest biomass will affect markets for
traditional forest products. In this study, we use the latest version of the
Sub-Regional Timber Supply (SRTS) model and current FIA data for southern
states (except Oklahoma) to assess the
potential impact of increased bioenergy production on Southern
U.S. forest product markets. We focus on the potential role of
residuals and examine the consequences of residuals developing as a separate
market or becoming fully integrated into pulp markets. We look at regional
comparative advantage that includes harvesting and transportation costs,
residual availability, and economic sustainability.
Key words: bioenergy,
biomass, forest sector modeling, forest residues, SRTS
JEL Classification: Q11,
Q23, Q42
The European Forest and Agricultural Sector Optimization Model
- EUFASOM
Uwe A. Schneider1*, Juraj Balkovic2, Stephane De Cara3, Oskar Franklin4, Steffen Fritz4, Petr Havlik4, Ingo Huck1,
Kerstin Jantke1, A. Maarit I. Kallio5, Florian Kraxner4, Alexander Moiseyev6, Michael Obersteiner4,
Chrystalyn Ivie Ramos1, Christine Schleupner1, Erwin Schmid7, Dagmar Schwab7and Rastislav Skalsky2
* Corresponding Author
1 Research Unit Sustainability and Global Change, Hamburg University, Germany
2 Soil Science and Conservation Research Institute, Bratislava, Slovakia
3 French National Institute for Agricultural Research (INRA), Thiverval-Grignon, France
4 International Institute for Applied Systems Analysis (IIASA), Laxenburg, Austria
5 The Finnish Forest Research Institute (METLA), Helsinki, Finland
6 European Forest Institute (EFI), Joensuu, Finland
7 University of Natural Resources and Applied Life Sciences (BOKU), Vienna, Austria
Land use is a key factor to social well-being and has become a major component in political negotiations. This paper
describes the mathematical structure of the European Forest and Agricultural Sector Optimization Model. The model
projects land use and land management, and demand for and supply of commodities from land-using sectors, under the
assumption that markets are competitive. The model represents simultaneously observed resource and technological
heterogeneity, global commodity markets, and multiple environmental qualities. Land scarcity and land competition
between traditional agriculture, forests, nature reserves, pastures, and bioenergy plantations is explicitly captured.
Regarding forest sector, in each region and for each time period, EUFASOM explicitly distinguishes standing forests by
species composition, age cohort, ownership, management, and soil characteristics. The forest industry production and
demand for forest products are also modelled in a detailed manner. The model is well-suited to estimate economic
potential of land based mitigation, leakage, and synergies and trade-offs between multiple environmental objectives. We
demonstrate the model use by exploring the impacts on the land use of a set of forest biodiversity protection alternatives
in the EU.
Development and Application of an
Integrated Forest
and Agricultural Sector Model for Use in Policy Analysis for Greenhouse Gas
(GHG) Mitigation and Adaptation: Lessons
Learned and Future Opportunities
Ralph Alig * 1 and Darius Adams 2
* Coresponding author
1 USDA Forest Service, PNW
Research Station, 3200 SW
Jefferson Way, Corvallis, OR 97331
ralig@fs.fed.us, phone: 541-750-7267, fax: 541-750-7329
2 Oregon State
University
Researchers from multiple agencies, universities, and
NGOs have worked on the Forest and Agriculture Sector
Optimization Model-Green House Gases (FASOMGHG)
model, which includes full carbon accounting of the US forest sector from forest
through final products and disposal.
Because large areas of land can move between forestry and agricultural
uses, responses from (and options in) the agricultural sector must be
considered for effective GHG policy analysis. Increased demands for land will
affect forestry’ potential contributions, such as significantly more cropland
to help feed an additional 3 billion people by 2050 while producing biofuels;
furthermore, tens of millions of other acres are needed to house another 125
million U.S.
residents. Outputs from the FASOMGHG model include: projections of future land
use patterns, forest resource conditions, agricultural production trends, life
cycle carbon implications, and impacts on producers and consumers in forest and
agricultural markets. Recent work
centers on GHG sequestration/mitigation strategies
involving both (private and public) forestlands, to identify superior policy
strategies over an entire projection period. This
paper summarizes the path of model creation, including anchoring to two models
with long histories in the forest and agricultural sectors, and discusses
lessons learned in modeling and application and offers observations on future
opportunities for extensions. The
evolving nature of the policy environment is also illustrated.
The Impact of Second Generation Biofuels on the Global
Forest
and Land-use Sectors
Petr Havlík1*,
Uwe A. Schneider1,2, Michael Obersteiner1, Ingo Huck2,
Georg Kindermann1, Christian Lull2, Timm Sauer2
and Erwin Schmid3
1 International
Institute for Applied Systems Analysis (IIASA), Forestry Program, Austria
2 University
of Hamburg, Sustainability and Global Change
(FNU), Germany
3 University
of Natural Resources and Applied Life Sciences, Vienna
(BOKU), Department of Economics and Social
Sciences, Austria
*International
Institute for Applied Systems Analysis (IIASA), Schlossplatz 1, A-2361
Laxenburg, Austria,
phone: (+43 2236) 807 0, Fax: (+43 2236) 71 313, email: havlikpt@iiasa.ac.at
A global static partial
equilibrium model integrating a forest sector model with models of the
agricultural and bioenergy sectors is presented. The forest biomass production
is modeled at the level of homogeneous response units (HRUs) – areas
characterized by the same altitude, slope, soil type, and belonging to the same
grid cell (0.5 degree resolution) and country. At this level, potential mean
annual harvest depending on the forest management is estimated by means of the
G4M model. The same HRUs are used in the agricultural module to estimate crop
(20 major crops) and grassland (7 major animal categories) yields, by means of
EPIC simulations. Thus competition over land is explicitly accounted for. The
forest industrial sector and demand for final products (sawnwood, pulpwood,
methanol, heat and electricity, crops and livestock commodities, ethanol and
biodiesel) is represented at a regional level, for some 30 global regions. The
model’s objective function is the maximization of the global market surplus
under technological and resource constraints. Prices, quantities and
international trade flows are endogenously computed. The model is applied to
study the environmental and social effects of the transition from first
generation biofuels to biofuels based on woody biomass. The results indicate
that the second generation is preferable to the first generation with respect
to total irrigation water consumption, total greenhouse gas balance, and food
security in the least developed countries. However, second generation biomass
appears to put higher pressure on forest resources as well as forest product
markets.
Impact Analysis of Endangered
Species Act on Stock Market Return in US Companies
Drs. Xianchun Liao* and Changyou Sun
* Coresponding author: xliao@CFR.MsState.edu, phone: (662)325-7481, fax: (662) 325-8726
Forest and Wildlife Research Center, Mississippi State University, Mississippi State, MS 39762
Endangered Species Act (ESA) is the most wide-ranging of the dozens of United States environmental laws passed
in 1973. The Act has achieved a great conservation success in the past three decades. However, the Act has been at the
center of controversy between conservation and market-driven economic development because more than 80% of
endangered species have some or all of their habitats on private lands. This study examined the effects of events related to
the Act on stock market return on forest products companies in the US using daily time series of stock market return.
Our empirical work employs capital asset pricing model, in which a series of dummy variables are used to pick up the
response of US firms to major events associated with the Act. The results revealed that the act had a negative, but not
statistically significant impact on US forest products firms as a whole. However, diversified firms responded to the act
differently.
Keywords: ESA, stock market return, capital asset pricing model, event, study
Integrating
Non-Timber Values into Market-Based Forest
Valuation Models
Bret P. Vicary, PhD, MAI
James W. Sewall Company, PO Box 433, 136 Center Street, Old Town,
ME 04468 USA
phone: 207-827-4456 x247, email: bret.vicary@jws.com
Forestland investments in the United States have become
increasingly complex over the past 25 years.
Investors have shifted from “pure timber plays” to investments that
derive returns from a broad array of products and services produced by the
forest. This trend started with Wall Street’s emphasis on creating profit
centers from industrial timberlands that were integrated with production
facilities. Today, U.S. industrial forest ownership is
practically a thing of the past, at least among public corporations. New classes of owners have emerged, and the
competition for forestland is hotter than ever.
New investors bring different sets of eyes to these investments. Discount rates have been bid down
dramatically. Now more than ever, it is
imperative for investors to unlock new sources of cash flows from the forest,
and be satisfied with historically low rates of return. The challenge in forest valuation has been to
keep up with these changes and remain attuned to the manner in which the more
competitive bidders are modeling timber and non-timber returns. Forest
valuation models now must recognize returns from timber, parcelization,
recreation, conservation, and preservation.
Returns from carbon markets represent the next logic addition to the
cash flow picture.
Modeling the Impact of Carbon
Trading Legislation on New Zealand’s Plantation
Estate
Bruce Manley
NZ School of Forestry, University
of Canterbury, Christchurch, New Zealand. bruce.manley@canterbury.ac.nz
The New Zealand Government is enacting legislation for
an emission trading scheme (ETS) under which owners of Kyoto-compliant forests
will receive/surrender credits for increases/decreases in the carbon stocks of
their plantations. Stand-level analysis
indicates that carbon trading will have a number of impacts:
·
the increase in
forest profitability will encourage afforestation;
·
species and
silvicultural regimes that give increased (and early) biomass production will
be preferred;
·
rotation length
will increase.
The goal of the ETS is to provide incentives to land
and forest owners to make decisions that help the New Zealand Government meet
its Kyoto Protocol obligations. This
paper gives the results of an analysis that models the likely impact of the ETS
on the carbon stock in New
Zealand’s plantation estate. An estate model is developed for New Zealand’s
600,000 ha Kyoto-compliant estate.
Potential land for afforestation is also included in the model. The impact on national carbon stock of
changing afforestation rate, species/silviculture and rotation length is
evaluated separately and in combination.
The sensitivity of results to carbon price is also explored – in
particular the impact of carbon price on forestry Land
Expectation Value and the affordability of purchasing land for afforestation.
Increased Use of Bioenergy: Impacts and Opportunities for the Norwegian
Forest
Sector
Birger Solberg and
Erik Trømborg1
Department of
Ecology and Natural Resource Management, Norwegian University
of Life Sciences, Ås, Norway
1 phone: +47 900
41478, email: erik.tromborg@umb.no
Increased energy prices and political commitments to reduce the
emissions of greenhouse gasses, have caused more attention on bioenergy
production in Norway, where forest biomass is the main resource for
increased bioenergy production. This study is based
on applying a regionalized partial equilibrium model covering forestry, forest
industries and the bioenergy sector. The main advantages of using this type of modelling is that it
allows for assessments of the economic potential of bioenergy under different
policy alternatives, taking into account the competition for raw materials,
regional differences regarding heat demand and wood supply, as well as
important spatial aspects connected to interregional transport and trade.
Pulpwood prices of pine and non-coniferous species are projected to increase by
20-30 percent if current production targets for bioenergy are implemented
through profitable energy price levels, whereas spruce pulpwood will continue
to be utilised for pulp and paper and less affected by energy price increases.
Except for particleboard mills, production levels of forest industries appeared
relatively insensitive to the energy price changes in the short run. The
impacts of increased use of forest-based bioenergy on timber prices, harvest
income, energy deliveries, forest industry structure and employment become more
important in the longer run, as investments change.
Incorporating Wood-Based Bio-Energy Models into FSMs
Larry Mason, Research Scientist
University of Washington,
College of Forest Resources, Box 352100, Seattle, WA 98195-2100
email: larrym@u.washington.edu, phone:
206-543-0827
Opportunities to utilize woody biomass for renewable
energy could provide additional public benefits such as forest restoration and
climate change mitigation. Yet without
accounting modules in FSM to quantify these multiple benefits, the comparative
advantage of wood to other energy feedstock alternatives has been
underestimated.
There are many market and
non-market values associated with collection and utilization of woody-biomass
as a clean renewable energy feedstock. In the forest, removals of surplus stems
and vegetation increase ecosystem resiliency and reduce disturbance
hazard. Disturbances that result in
extensive forest mortality are known to be economically and environmentally
costly. When forests are managed to
produce a hierarchy of building, paper, and energy products, life cycle
analysis has shown that net reduction in atmospheric CO2 occurs as trees
sequester carbon through photosynthesis, store it in long-lived products, and
displace the use of polluting product alternatives. A variety of organic energy conversion
alternatives to displace fossil fuel reliance are being pursued yet only
recently have net energy balance calculations been considered. It appears that the net energy balance from
cellulosic conversion of wood to ethanol is several times more favorable than
that from starch conversions of agricultural crops. While all these factors should make wood
residues a preferred energy feedstock, forest restoration, carbon
sequestration, and net energy balance benefits have yet to translate into net
market value recognition. Quantification
of such benefits in concert with other FSM outputs are needed to inform the
recognition of wood residue as desirable and finite energy resource not a
costly and over-abundant waste problem. Forest modeling can
help.
This presentation will showcase development of
integrated value analysis modules for use with the Landscape Management System
(LMS), a forest modeling software program developed at the UW.
Economy-wide Impact Analysis of Policies to Promote Forest Biomass and Bioenergy in Florida
Ming-Yuan Huang and Janaki R. R. Alavalapati
School of Forest
resources and Conservation, Newis-Ziegler Hall, University of Florida,
PO Box 110410, Gainesville, FL 32611,
United States
The
Energy Independence and Security Act 2007 established a goal of 36 billion
gallons of biofuels per year by 2022. Of that, corn ethanol production is capped
at 15 billion gallons per year starting in 2015 and the remainder is
anticipated from cellulosic biofuels. This policy is expected to stimulate new
market opportunities for forest biomass. Private forests in Florida have a high
potential of producing forest biomass that can be utilized to produce liquid
biofuels or to generate electricity through co-firing. Florida government has
also initiated bioenergy programs and policies, Florida Renewable Energy
Technologies & Energy Efficiency Act for example, to promote bioenergy.
This
study investigates the effect of a suite of potential forest bioenergy
policies. These policies include a displacement of fossil fuels with x% of
biofuels produced from forest biomass; a price premium for electricity produced
through co-firing; and incentives for cellulosic ethanol producers. We expect
that these policies will not only impact the forest sector by creating demand
for forest biomass but other sectors of the economy through factor markets.
Therefore, we apply a computable general equilibrium (CGE) model to capture
these inter-sectoral linkages. Specifically, we estimate the impacts of
specified policies on input and output markets and welfare of Floridians. We
hope that these results provide valuable information for policy makers in their
decision-making.
An Economic Analysis of
Mountain Pine Beetle Impacts in a Global Context
Brant Abbott1,
Brad Stennes1 2 and G. Cornelis van Kooten *
*
Corresponding author: Department of
Economics, University of Victoria, PO Box 1700 STN CSC, Victoria, BC V8W 2Y2 CANADA, Voice: 250-721-8539, Fax:
250-721-6214, kooten@uvic.ca
1 REPA
Research Group, Department of Economics, University of Victoria, PO Box 1700,
Stn CSC, Victoria, BC V8W 2Y2 babbott@uvic.ca,
2 Pacific
Forestry Centre, Canadian Forest Service, Victoria,
BC email: bstennes@nrcan.gc.ca
The economic effects of the British Columbia mountain pine
beetle outbreak are simulated using a multi-region spatial price equilibrium
model coupled with a stochastic dynamic updating procedure. The simulation
captures the expected changes in the B.C. timber supply, growth of southern
plantation forests and an escalating Russian log export tax. Results are the
expected time paths and confidence intervals for timber harvest, lumber
production, inter-regional trade in logs and lumber, regional log/lumber
prices, and economic surpluses. The static phase of the model solves for a
competitive equilibrium using a method similar to the PELPS model, but uses
quadratic rather than linear programming. QP allows demand and cost curves to
be continuous rather than step functions.
The dynamic phase connects the static phases by updating model
parameters using simple recursive stochastic relations (uncertainty of
estimated parameters). The model is iterated over the simulation period 2000
times so that results converge in distribution. Distribution means are
considered the best estimates of results, but confidence intervals are also
reported. The results indicate that
lumber and log prices will rise in B.C., offsetting some of the economic loss
to timber producers. On net, B.C. forest producers will experience a decline in
economic surplus.
Agent-based Forest Sector
Modeling for Investment and Policy Decisions Following Natural Disturbances
Olaf Schwab, Ph.D. Candidate
Faculty of Forestry, University of British Columbia,
2045-2424 Main Mall, Vancouver, BC, V6T1Z4
Email: oschwab@interchange.ubc.ca, Phone: 604-219-3196
The agent-based forest sector
simulation model presented in this paper improves upon comparative statics in
two areas: First, it relaxes several commonly made assumptions (market
clearing, rational behavior, common knowledge) that have limited the
applicability of economic modeling results in decision support systems. Second,
it provides spatially and temporally differentiated information on the behavior
and decision making processes of individual industry actors during transition
phases. The mountain pine beetle infestation in British
Columbia is used as the primary case study. Following such a
disturbance, industry actors need to rapidly adjust to take advantage of opportunities
such as salvage harvesting or incentives for innovation and industrial
restructuring, while addressing challenges such as short-term timber supply
shortages or concentrated environmental degradation. The BC forest products industry is modeled as
250 industry agents belonging to three interdependent sectors. These agents
interact with each other, as well as with the markets for roundwood and primary
wood products using an experience-weighted attraction learning algorithm. This
learning process enables agents to dynamically adjust decision preferences
based on the perceived stability of its environment, past successes and
failures, and individual levels of risk aversion and innovativeness. This model
utilizes a grid-based forest inventory with a 256 hectare resolution. This
database has been linked to the ClimateBC meteorological model for simulating
the effects of insect infestations and other climate-dependent disturbances.
The forest sector model has coded using the open-source Repast J program libraries.
Simulation
Analysis of the Japanese Wood Market
Satoshi TACHIBANA 1 and Hirofumi KUBOYAMA
Organization: Hokkaido
Research Center,
Forestry and Forest Products Research Institute, and Department of Forest
Policy and Economics, Forestry and Forest Products Research Institute
1 Corresponding author
Address: 7
Hitsujigaoka, Toyohiraku, Sapporo, Hokkaido, 062-8516, Japan
phone:
+81-11-851-4131, +81-11-590-5534 (direct), fax: +81-11-851-4167, email: binn@affrc.go.jp
Brief: This
study econometrically analyzes supply and demand in the Japanese wood market,
which consists of domestic roundwood by major species, imported roundwood and
imported wood products. Annual data since 1973 is used for the model
estimation, and the two/three-stage least squares method is used to avoid
estimation bias. The main results of this estimation are as follows: (1)
coefficients for sawmill capacity and housing starts in Japan are significant
with positive signs in the domestic roundwood demand functions, (2)
coefficients for logging productivity and private forest land area older than
45 years old in Japan are significant with positive signs in the domestic
roundwood supply functions, (3) substitution relationships via imported
roundwood prices between imported roundwood and imported wood product demands
are found in the estimations, and (4) the coefficient for US housing starts is
significantly negative in the supply functions of imported roundwood and wood
products. These factors significantly influence the Japanese wood market.
Furthermore, the simulation analysis utilizing this estimated model shows that
the supply of domestic roundwood may increase when a negative time trend
variable is deleted in the domestic roundwood
supply function, and prices of imported roundwood and wood products will rise.
Derived Long-Run and Short-Run Relation of a Lumber
Market
Nianfu Song* and Sun Joseph Chang
Louisiana State University
email: nsong1@lsu.edu phone: 225-578-4215
Short-run
elasticity is the response of supply or demand to a change in a variable in a
short time when some factors do not have enough time to change.
Econometrically, the short-run model is a restricted long-run model. It is
usually unknown how long a long-run response takes. The error correction models
(ECM), however, enable us to estimate the one-period elasticities as the
short-run responses and the infinite period elasticities as the long-run
responses An ECM model can be either
estimated directly or derived indirectly from an estimated model. A direct
estimation of an ECM often has conflicting results since the relation of the
long-run and short-run coefficients is ignored. An indirect estimation will
always have the long-run and short-run coefficients consistent with economic
theories because all the long-run and the short-run coefficients are derived
from the same set of estimated coefficients. Our paper will present an
application of the latter approach to estimate a lumber model and derive the
long-run and short-run elasticities.
Integration of
Disaggregated Elasticity Estimates into the SubRegional Timber Supply Model
Robert C. Abt, Robert H. Beach, Frederick W. Cubbage, and Jui-Chen Yang Senior
authorship is not assigned.
Public
and private decision makers frequently rely on forest sector models (FSMs) to
project future conditions in forest product markets and changes in land use
under alternative scenarios. FSM assumptions regarding parameters that
represent the behavior of private forest landowners in response to changing
incentives have a substantial influence on model results. However, these
parameters are often based on assumed values or empirical estimates that are
not necessarily available at a level of regional, forest type, and ownership
disaggregation consistent with that being utilized in the FSM. In this study,
we use FIA data for southern states (except Oklahoma) to econometrically estimate harvest and planting elasticities by
species, owner, and sub-region. These parameters are integrated into the latest
version of the Sub-Regional Timber Supply (SRTS) FSM to examine the
implications of incorporating these disaggregated empirical elasticities for
model results on the effects of forest management decisions for forest outputs,
productivity, inventories, and land use over time. We believe the use of
parameters estimated using a more comprehensive and representative dataset and
available at a level of disaggregation consistent with that of the FSM in which
they are being used can significantly improve the performance of FSMs.
Key words: econometrics, elasticities, FIA, forest sector
modeling, SRTS
JEL Classification: Q11,
Q23, Q42
Modeling Pine Pulpwood Supply and
Demand in the US
South: a Structural and Non-Structural Approach
Dr. Xianchun Liao
Forest and Wildlife Research Center, Mississippi State University, Mississippi State, MS 39762
email: xliao@cfr.msstate.edu, phone: (662)325-7481, fax: (662) 325-8726
The paper examines the determinants of pine pulpwood supply and demand in the southern US using annual data from
1950 to 2002. Cointegration analysis and a structural simultaneous system of equations are employed. The results of
cointegration analysis show that there exist fourcointegrating vectors for the system (pulpwood quantity, pulpwood price,
inventory, sawtimber price, final paper price, wage rate, capital cost, and energy use). The results of SSE model show
that price elasticities of supply of and demand for pine pulpwood are relatively small, but consistent with previous studies
for the US South. In addition, the substitution between pulpwood stumpage and energy use was found with an elasticity
of -0.68.
Keywords: pulpwood supply and demand, cointegration analysis, structural simultaneous model, the southern US
The Impacts of Increasing Russian
Roundwood Export Tariffs on the Forest
Sector Markets
Prof. Anne Toppinen1*,
Dr. Alexander Moiseyev2, Prof. Birger Solberg3 and Dr.
Maarit Kallio4
1 University of Helsinki, Department of Forest Economics, PO Box 27, 00014 Helsinki, Finland,
email: anne.toppinen@helsinki.fi
2 European Forest
Institute, Torikatu 34, 80100 Joensuu,
Finland
3 Norwegian
University of Life Sciences, UMB, P.O.Box
5003, 1432 Ås,
Norway
4 Finnish Forest
Research Institute, Unioninkatu 40 A, 00170 Helsinki, Finland
Russian federation is the world’s
largest net exporter of roundwood, totalling at 51 million cubic meters in
2006. This study uses a partial equilibrium global forest sector model EFI-GTM
to scrutinize how forest products markets will evolve towards 2020 under
different export tariff levels implemented on the Russian roundwood. Based on
our results, implementing roundwood export tariffs could improve development in
the sawnwood and pulp industry production in Russia. However, the level of
harvesting activity in the Russian roundwood market would nevertheless remain
at a lower output level as compared to the baseline scenario without further
tariff increases. It will take essentially both
the high level of export tariffs in conjunction with improvement in the Russian
investment climate for its sawmill and pulp industry to develop favourably.
Therefore, the investment climate is more crucial than trade policy for the
forest industry development in Russia.
Also, it seems to be more difficult to develop forestry than forest industry in
Russia
through restrictive trade policy.
Keywords: roundwood trade, forest industry, Russian federation,
export tariffs, forest sector analysis
Development of a Conceptual Model of
International Marketing Strategies and its Application in the Brazilian Pulp
and Paper Sector
João Carlos Garzel Leodoro da Silva1,
Alexandre Anders Brasil2
Associate
Professor at Universidade Federal do Paraná (UFPR) - Brazil, Visiting Professor at
Michigan State University (MSU)
126 Natural Resource Building, East Lansing, MI, 48824, USA
phone: 517-355-7444, Fax:
517-432-1143, email: garzel@ufpr.br
2 PhD Student,
Department of Forestry, Michigan
State University
(MSU)
Studies of marketing
strategies and of the variables that influence them are extremely important for
the increment of the firm’s competitiveness. To understand these processes,
this study presents a model for analysis of international marketing strategies
in the Brazilian pulp and paper sector. Five groups of international marketing
strategy were assessed, being one of long-run: a) Strategic level; and four in
operational level: b) Product; c) Price; d) Place, and e) Promotion.For the
development of the model, the dependences of previous strategies were analyzed
given six groups of influence: 1) Characteristics of administration, 2) past
exports performance, 3) perception of barriers, 4) perception of opportunities,
5) objectives and 6) competitiveness positioning.To verify the level of
dependency it was developed: (1) analysis of correlation, (2) econometric
analysis, and (3) indicative table of significative influence (ITSI).Based on
the ITSI, it was verified that the high administration of the pulp and paper
industry take different considerations to formulate each international
marketing strategy. For strategy: a) strategic level all groups of influence (1
to 6), while for b) Product - 5 groups
of influence (2 to 6), c) Price– 4 groups of influence (2, 3, 4 and 6), d)
Place - 3 groups of influence (2 to 4), and e) Promotion just one group of
influence (5).This conceptual model attended the proposed objectives, and it is
suggested to be applied to other segments of the forestry sector. At the same
time, these empirical results give fundamental direction for new research in
this – not very studied – field. It is also strongly suggested the application
of this model in the pulp and paper sector on other countries, with the purpose
of comparative assessment and benchmarking.
Impact of Anti-Dumping Policy on
Wooden Bedroom Furniture Imports from China
Changyou Sun1 and Yang Wan
1 Department of Forestry, Mississippi State University, Mississippi State, MS 39762;
Tel: (662) 325 7271; Email: csun@cfr.msstate.edu.
China has become the leading supplier of wooden furniture for the United States in recent years. As a result, the
American Furniture Manufacturing Committee for Legal Trade and its members filed a petition to the U.S. International
Trade Commission in 2003. In December 2004, the anti-dumping investigation concluded that "an industry in the Unites
States is materially injured by reason of imports from China of wooden bedroom furniture." As a result, various tariff
rates were imposed on 121 Chinese firms, ranging from 0.79% to 16.70%. In this study, the import patterns of wooden
bedroom furniture from China since 1989 will be reviewed. The positions of various parties (i.e., U.S. retailers, U.S.
importing agencies, U.S. furniture manufacturers, and Chinese furniture firms) will be investigated and compared.
Furthermore, the impact of these investigations and anti-dumping policies on the price of wooden furniture in the United
States will be investigated using ARIMA Interventional Analysis. The study will help us understand the impact of trade
policies on U.S. wooden furniture industry.
Scenario Analysis of the Impact of Potential Measures to
Prevent Import of Illegal Wood and Wood Products
Alexander Moiseyev1, Birger Solberg2, A. Maarit I. Kallio3 and Bruce Michie1
1 European
Forest Institute, Torikatu 34, Joensuu
80100, Finland
Phone: +358 (0)10 773 4328, email: moiseyev@efi.int
2 Norwegian
University of Life Sciences, Norway
3 Finnish
Forest Research Institute, Helsinki,
Finland
Assessment of the impact of
potential measures to prevent import of illegally harvested wood is carried out
with the global forest sector EFI-GTM model.
The impact of several policy options was assessed: a) Baseline Scenario
– Voluntary Partnership Agreements (VPA) are made between EU and six baseline
countries; b) Option1 – expanded VPAs are made between EU and 12 countries; c)
Option 3 assumes that all illegal imports from all non-EU countries to the EU
are eliminated; d) Options 4 assumes that all illegal imports from all non-EU
countries to the EU as well as illegal logging within the EU are
eliminated. The most significant impact
under the baseline scenario is reduced harvest, increased wood prices and
reduced production in particular for the baseline VPA countries. Expanded VPA
countries, EU, USA and other low
risk countries are increasing their harvests, production and value added.
However, these positive changes are marginal.
Under Option 1 scenario all 12 potential VPA countries are expected to
suffer from lower harvests and production. EU, USA
and other low and high/moderate risk countries are increasing their harvests,
production and value added. These positive changes are substantially more
significant, since suggested 12 VPA countries are covering most of the trade of
illegal wood. Under Option 3 & 4 the
impacts are rather minor, since these options do not foresee FLEG measures for
high-risk countries under VPA arrangement. These options are mostly affecting
trade with EU in the short to medium term.
Modeling the
Implications of Illegal Logging for the New Zealand Forest Sector
James A. Turner1, Andres Katz, and Joseph
Buongiorno
1 Forest
Economist, Scion, Private Bag 3020, Rotorua,
New Zealand
email: james.turner@scionresearch.com, phone: +64-7-343-5437
Illegal logging has a
detrimental effect on wood products trade and sustainable forest management. These
effects extend beyond the countries in which illegal logging occurs. This study
determined the impact of illegal logging on the competitiveness of New Zealand wood products
in both domestic and foreign markets. Two complementary forest sector models, the
Global Forest Products Model and Radiata Pine Market Model were used. The GFPM
provided estimates of the effect of illegal logging on global prices and trade
of wood products from logs to wooden furniture. These price impacts were used
in the RPMM to develop more detailed estimates of the impacts on the New Zealand
radiata pine sector and investment in forestry.
Predicted changes in New
Zealand’s export markets suggest that there
will be higher prices for species competing with radiata pine in international
markets. This will lead to increased demand and, hence production of and prices
for radiata pine, particularly export logs. Overall, the elimination of illegal
logging leads to significant increases in the price and production of wood
products in all countries that do not have suspicious harvests. An economic
incentive, therefore, exists for legitimate producers in these countries to
support a reduction in illegal logging.
European Scale
Forest Resource Modeling at High Resolution Based on
Inventory Data
G.J.Nabuurs
Alterra, Wageningen
University, Netherlands,
Gert-Jan.Nabuurs@wur.nl, 06 53544674
European forests are highly diverse, serve a wide
variety of societal needs, and are owned by a wide range of forest owners in 36
countries. In the past projections of the approximately 175 million ha with the
EFISCEN model were based on slightly aggregated inventory data. These data
were gathered from the national inventory institutes, and projections addressed
availability of wood, carbon issues and biodiversity aspects, as well as
biomass for bioenergy. In order to improve the projections we have gathered
plot level NFI data from each national NFI institute. We now have 330,000 plots
from 18 countries. A new high
resolution simulation model (EFISCEN-SPACE) is presented as an improved tool to
analyse European forest resource development under climate change. The new tool
allows overlays with various sorts of GIS material and allows improved
assessments in relation to management changes, and improved links to forest
sector models employed for Europe, like EFI
GTM. The improved model is a diameter class cohort model running for
pseudo-stands at the 1x1 km resolution. Issues to be addressed are related to
wood availability, future assortments, biomass for bio energy, bio diversity,
accessibility and distances to industry, impacts of climate change and carbon
issues.
Carbon Taxes,
Carbon Accounting and Forest Biomass Burning for Power Generation in British Columbia
Kurt Niquidet1 *,
Brad Stennes2,1 and G.C. van
Kooten3
*
Corresponding author
1 Department of
Economics and REPA Research Group, University
of Victoria, (niquident@uvic.ca)
2 Pacific
Forestry Centre, Canadian Forest Service, Victoria,
British Columbia, (bstennes@pfc.cfs.nrcan.gc.ca)
3
(kooten@uvic.ca)
A system of
carbon subsidies and taxes are often proposed as a means of encouraging the
enhanced utilization of forest biomass (e.g., logging residues) in the
production of energy by displacing the burning of fossil fuels (e.g., see van
Kooten, Binkley and Delcourt 1995). The frequent presumption is that this will
significantly reduce a region’s CO2 emissions because biomass
burning to produce electricity is assumed to be ‘carbon neutral’. However, this
assumption tends to ignore three significant factors: The energy inputs
required to extract, transport and transform the biomass; The discounting of physical carbon; and
Energy demand growth and the actual displacement of fossil fuel use from
base-case levels. Nonetheless, in light of the massive destruction of interior
forests in British Columbia
by the mountain pine beetle (MPB), environmentalists and government are keen to
employ forest biomass as an energy source. One proposal called for a 300
megawatt (MW) capacity power plant to be built in the Interior to burn MPB
damaged timber (Kumar, Cameron and Flynn 2003). While no plants are currently
under consideration, a carbon subsidy/tax scheme, or a carbon trading market,
might provide the incentive required to make a power plant financially
feasible. To assess the feasibility of a wood biomass-fired power plant in the
BC Interior requires knowledge of wood biomass supply over a period of 30
years, and not just the next ten years when MPB damaged timber might be
available. To ensure an adequate fiber supply, it is necessary to know how much
residue might be available over a 30-year time horizon, and how and to what
extent a biomass burning facility will need face competition for fiber from
sawmills and pulp mills. Further, given that supply of wood biomass might be
erratic over time, and in addition to carbon subsidies, what would be the
benefits of co-firing biomass with coal in order to make the power plant
financially attractive? To address these
issues, we construct a mathematical programming model of fiber flows in the
forest sector in British Columbia
over a 30-year time horizon. The focus of the model is on transportation and
the potential competition for fiber that a new biomass-burning power-generating
facility will face. The model incorporates the three concerns raised above,
and, for various scenarios of carbon ‘prices’, discount rates and electricity
demand growth, determines the optimal size of a power plant and the extent to
which it would need to rely on coal to ensure continuous operation. Further, we
examine the effects on CO2 emission reductions and their associated
cost, and the consequences for existing processing facilities – sawmills, pulp
mills and extant generators using waste wood. Preliminary results suggest that
the benefits are not always as large as they would first appear.
Assessing Potential Carbon
Sequestration-Harvest Trade-offs with a Dynamic Regional Market Model of Public
and Private Timberlands in Western
Oregon
Eunho Im1 and Darius M. Adams2
1 Post-doctoral Research Associate, Department of
Forest Resources, Oregon State University,
Corvallis, OR, 97330 USA
2 Professor and Interim Head, Department of Forest
Resources, Oregon State University,
Corvallis, OR 97330 USA
This study examines the potential impacts of raising federal timber
harvest on log markets and sequestration of carbon in forests and forest
products in western Oregon. We construct a dynamic model of the region’s
log markets in which market prices, log consumption, timber harvests and timber
inventories on private, federal, and state forests are endogenous. Simulation
results suggest that regional carbon flux in forests and forest products would
gradually decline as harvest rises from federal timberlands. Projections of harvest by ownership, given the
constraint of a regional carbon flux target, show that there are opportunities
for substituting timber harvest and carbon sequestration between federal and
non-federal lands. A relatively small
reduction in non-federal harvest would offset a substantial loss of carbon flux
on federal timberlands. This is possible
in part by lengthening rotation ages, shifting the concentration of harvest
within an ownership toward stands with lower rates of carbon growth, and by
modest reductions in cut. Similar levels
of carbon sequestration could be achieved if a carbon offset market were
available for all owners, including federal agencies.
The Implications for the Timber Sector of US
Biofuel Mandates
Roger A. Sedjo1 and Brent Sohngen
1 Senior Fellow
Resources for the Future, 1616 P Street, NW, Washington,
DC 20036-1434
Email: Sedjo@rff.org
A question that arises is that of the potential role
in the US
for biofuels generally and cellulosic biofuels specifically. The Energy Act of 2007 calls for targeted
mandates for biofuels and cellulosic biofuels to the year 2022. However, the increase in harvests needed to
supply the new biofuel industry would be substantial. We estimate the wood required for biofuel
feedstock to be equal to 348 million m3 or 71% of the US 489 million m3 2005 harvest
(FAO2006).
This paper examines the implications on the timber
supply of the mandated cellulosic biofuel production. The approach uses the global timber supply
model (Sohngen et al. 1999). The results
show that in a global market, a substantial amount of the timber is diverted
from traditional forest industry uses to feedstock in biofuels. Globally prices and volumes increase. U.S. production increases, but only
modestly as foreign supplies pick up much of the new production required for
the global adjustment.
Wood Use Increase in Construction Sector; Market, Forest Management and Climatic Impacts - Towards an
Integrated Modeling Framework
Ljusk Ola Eriksson1, Sofia Backéus 1, Leif Gustavsson2, Kim Pingoud3,
Johanna Pohjola4, Birger Solberg5, Jarle Svanaes6, Lauri Valsta7, Henna
Lyhykäinen7, Maarit Kallio4, Riitta Hänninen4,
Roger Sathre2
1 Swedish University
of Agricultural Sciences Dpt. of Forest
Resource Management
2 Mid Sweden University,
Ecotechnology
3 VTT
Technical Research Centre of Finland
4 Finnish
Forest Research Institute
5 Norwegian University of Life Sciences (UMB) Dept.
of Ecology and Natural Resource Management
6 Norsk
Treteknisk Institutt
7 University of Helsinki, Department of Forest Economics
1
Corresponding author: SLU, SE-901
83 Umeaa, SWEDEN
Mobile: 070 644 000 4, E-mail:
Ola.Eriksson@resgeom.slu.se
Increasing the use of wood material in construction is
a potential option for reducing net CO2 emissions because of (1) the relatively
low fossil energy needed to manufacture wood products compared with alternative
materials, (2) the increased availability of bio fuels from wood by-products
and (3) the storage of carbon in wood building materials.
A comprehensive analysis of the integration between
forest management and substitution strategies requires the integration of
forest management models at stand and regional level with wood substitution
impacts. In this study, several existing models representing different parts of
the forest sector are linked in order to cover the life-cycle of wood. The models integrated were (a) a forest stand
model, (b) a regional forest model, (c) a global forest sector model and (d) a
model for wood substitution. The main
objective of the this study was to establish such a framework in order to
prepare for more comprehensive future studies.
We analysed tentative scenarios on the impact of
material substitution in the construction sector as well as scenarios on the
total carbon balance of forests. The
increased material substitution due to larger market share of wood or wooden
frame houses in the construction sector affects the demand and prices of
various timber assortement as will be demonstrated by the results of the forest
sector model. This affects forest
management over time, which will be analysed with the regional forest models
and stand models. The overall effects are estimated for Sweden. The consistency of the linkages between
models are investigated and missing models and linkages are identified.
The US
Forest Assessment System: Modeling and Forecasting the Forest Sector in the United States
David N. Wear, Robert Huggett, and Robert C. Abt
US Forest Service
Southern Research Station
Research Triangle
Park, North
Carolina
The United States Forest Assessment System (USFAS) has been designed to support RPA Assessments
and other strategic analysis that addresses forest conditions and change in the
United States. This modeling system links analysis in three
separate domains: Forest Uses, Forest
Dynamics, and Ecosystem Services. The
Forest Uses Domain focuses on simulating the direct human interface with
forested areas, including the projection of land uses, timber harvesting, and
resource management decisions. The
Forest Dynamics Domain focuses on simulating the development of forest
conditions in response to direct forest uses and changes in the
environment. The Ecosystem Services
domain focuses on translating change in forest condition into meaningful
estimates of effects on ecosystem services such as water, biodiversity, and
carbon storage. This presentation
describes ongoing research in designing the Forest Dynamics Domain of the USFAS. This
domain forecasts forest conditions in the United States at the plot level and
derives regional forecasts from the area frame design of the survey. With forecasts generated at this fine grain,
resource and ecosystem attributes can be aggregated to levels that match a wide
variety of resolutions. Forecasting
requires models of timber harvesting behavior as well as transition models that
describe other disturbance regimes, natural succession, and response to climate
variables.
Consequences of Climate Change for
the Global Forest
Sector
Joseph Buongiorno*, Jeff Prestemon, Ronald
Raunikar, James Turner, Shushuai Zhu1
1In
alphabetical order.
* Department
of Forest and Wildlife Ecology, 1630 Linden Drive, University of Wisconsin, Madison,
WI 53706, U.S.A. email: jbuongio@wisc.edu phone: 608-262-0091
The paper will describe an
application of the Global Forest Products Model (GFPM) to forecast the economic
implications of climate change for the global forestry sector. The GFPM is being modified to link the forest
sector to existing climate change scenarios.
The projections are prepared for 180 countries and 14 groups of forest
products, ranging from fuelwood to paper and paperboard. Forecasts cover production, imports, exports,
and prices, for each country and product, from 2006 to 2100. The climate change
scenarios examined are a subset of the “story lines” prepared by the
Intergovernmental Panel on Climate Change (IPCC). Each IPCC story line has projections of
population and gross domestic product.
These projections are used as input in the GFPM simulations. The IPCC
also makes projections of forest area, which are integrated in the timber
supply sub models of the GFPM. The IPCC storyline-scenarios also predict
bioenergy production. These projections
are used in the GFPM to determine the amount of wood remaining for the rest of
the forest sector. After determining
the implications of the IPCC scenarios for world forest area and forest stock,
the GFPM is used to predict the effects of these changes on forest industries
and forest products trade, up to the year 2100.
Finnish
Forest
Sector Model: Analyzing Bioenergy and
Climate Policy Implications
Hanna-Liisa Kangas, Jani Laturi, Jussi Lintunen, Lauri
Hetemäki* and Jussi Uusivuori
Finnish Forest Research Institute
*Corresponding Author:
Finnish Forest Research Institute, Unioninkatu 40 A, FIN-00170
Helsinki FINLAND
phone: +358 10 211 2218,
email: hetemaki@metla.fi
The development related to bioenergy and climate changes are creating
opportunities and challenges to forest sector in various countries. For example,
the European Union and national policies related to bioenergy and climate
change mitigation are having, and will have, major impacts for the development
of the forest sector in Finland. These impacts
are closely tied to the development of the forest and energy industry in Finland.
Currently, there are no models in Finland which analyze the energy
and climate change policy impacts in detail to the forest sector and energy
sector simultaneously. This paper presents the ongoing work at the Finnish
Forest Research Institute in building a partial equilibrium simulation model,
in which the various bioenergy and climate change policy measures and their
impacts to Finnish forest and energy sector are analyzed.
Potential Forest Sector Impacts of Climate Change on Douglas-fir
Forests of the United States
Pacific Northwest
Gregory Latta1, Darius Adams2,
Hailemariam Temesgen3, and Tara
Barrett4
1Oregon State University,
Corvallis, OR, USA,
greg.latta@oregonstate.edu
2Oregon State University,
Corvallis, OR, USA,
darius.adams@oregonstate.edu
3Oregon State University,
Corvallis, OR, USA,
hailemariam.temesgen@oregonstate.edu
4Pacific
Northwest Research Station, Anchorage,
AK, USA,
tbarrett@fs.fed.us
As global climate changes over the next 100 years,
forest productivity is expected to change as well. Using PRISM climate and
productivity data measured on a grid of 3356 plots, we developed a simultaneous
autoregressive model to estimate the impacts of global climate change on
productivity of Pacific Northwest (PNW) forests of the United States of America. Productivity,
measured by projected Douglas-fir site index, is explained by the interaction
of annual temperature, precipitation, and precipitation in excess of
evapotranspiration through the growing season. Coupling the site index model
with existing growth and yield models we create future forest yield tables for
four scenarios depicting various levels of global population growth, economic
development and energy usage from the Special Report on Emissions generated for
the 4th Assessment Report of the IPCC.
These yield tables then become input for a regional forest sector market
model which determines the optimal management regimes, harvest timing, market
prices and changes in individual mill processing capacity over time. The resulting forest sector model solution
provides important insight for forest policy makers and managers on future
regional wood production, processing capacity, rotation ages and silvicultural
investment.
Keywords: Mapping
climate change; mean annual increment; simultaneous autoregressive model; site
class
Structure of New U.S.
Forest Products Module (USFPM) in GFPM
Peter J. Ince 1 and Andrew Kramp 2
1 USDA Forest
Service, Forest Products Laboratory, One Gifford Pinchot Drive, Madison,
Wisconsin 53726-2398 USA, phone:
608-231-9364, fax: 608-231-9592
2 University
of Wisconsin, Department of Forest Ecology and
Management, Madison, Wisconsin
This paper describes the
structure of the new U.S. Forest Products Module (USFPM) that was recently
built within the framework of the Global Forest Products Model (GFPM). The
combined model (USFPM within GFPM, or USFPM/GFPM) uses the Price Endogenous
Linear Programming System (PELPS). The purpose of USFPM is to provide detailed
long-term projections of U.S. forest sector
market trends within the global forest product trade analysis of GFPM. USFPM
adds regional detail to GFPM by incorporating three separate U.S. timber supply and demand
regions. USFPM adds product detail by differentiating timber supply into
hardwood and softwood species groups, and sawtimber and non-sawtimber size
classes. USFPM adds also other product details that are important in modeling
the U.S.
forest sector, such as differentiating between hardwood and softwood lumber
within the generic sawnwood product category, differentiating hardwood and
softwood plywood, and differentiating OSB structural panels from industrial
particleboard. In the USFPM/GFPM context, fuelwood demand includes projected
global and regional demands for all wood biomass energy production. This paper
describes how USFPM was calibrated and how it operates within the GFPM
framework to provide long-term projections of U.S. forest product and timber
market trends in the context of global forest product trends.
Accounting for Uncertainty in a Forest Sector Model Using
Monte Carlo
Simulation
A. Maarit I.
Kallio 1 and Petri Hilli 2
1Finnish Forest Research
Institute, Unioninkatu 40 A, FIN-00170 Helsinki
Email: maarit.kallio@metla.fi
2 Helsinki School of Economics
Large scale forest sector
models tend to have thousands of parameters, of which many have values that are
not known exactly, and which thereby rely on expert estimates or are
represented, for instance, by the mean of the possible values. In addition to
the uncertainty in the data, there is uncertainty over the operating
environment of the sector, e.g., how the demand for the final products or the
prices for the exogenous inputs develop. Typically, the model analyses consist
of a base case projection, with which scenarios assuming alternative developments
are compared. In addition, sensitivity analyses with some modified parameter
values may be presented. What remains unaddressed is the impact of the overall
uncertainty on the results. In this paper, we provide an attempt to
systematically account for the uncertainty in a forest sector model analysis.
Applying Monte Carlo simulation into a spatial partial equilibrium model
for the Finnish forest sector, we look at the impacts on the model projections
of the uncertainty in the parametric data and in the future developments of the
exogenous factors.
Modeling and Projections of Forest Resources
in Japan
Hirofumi KUBOYAMA*, Hiroyasu
Oka and Satoshi TACHIBANA
Department of Forest Policy and Economics,
Forestry and Forest Products Research Institute
*Corresponding author:
Address: 1Matsunosato Tsukuba, Ibaraki, 305-8687, Japan
Tel: +81-29-829-8324, Fax: +81-29-873-3799
E-mail:
kuboyama@affrc.go.jp
Brief: Forest Age Distribution
Assessment System (FADAS) has been developed to simulate future forest area and
its stock by forest types and age classes. FADAS has two main sub-systems, one
is national forest sub-system which follows agency’s production plan, another
is private forest sub-system which depends on wood markets and resource
conditions. Harvested area functions were estimated by using time series and
nation-wide plot sampling data to calculate estimated harvest area of
clear-cutting or thinning for conifer plantation forest, conifer natural forest
and broadleaf natural forest. To derive this, logarithmic ordinary least square
function were used. Harvested area by forest type, harvest type and age class
was used as dependent variable, and as independent variables, log prices,
logging cost, forest area by each forest type and age class, forest area which
is same forest type but older than that age class, age class, conversion area
of forests and damaged area of forests were used. Function of reforestation
area was estimated by using time series data of reforestation area, forestry
wage, forest area over 40 years old and log prices. This model does not
estimate future demand/supply but future forest structure under exogenously
given demand/supply amount. In this study, we assume some scenarios for future
demand/supply, one was that timber supply in Japan would increase gradually up
to 25 million m3 by 2020. The main results of this simulation were
as follows: (1) log supply from commercial thinning increased significantly, (2) plantation
forest decreased less than 2% because clear-cutting area was not increased and
reforestation activities was stable, (3) over 80% of natural or plantation
forest became over 40 years old in 2020.