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The GFPMX projects forest area and stock, consumption, production, imports, exports, and prices of industrial roundwood, fuelwood, sawnwood, wood-based panels, wood-pulp, and paper and paperboard, in 180 countries, and currently from 2018 to 2070. The core principle of the model is the Cobweb theorem, according to which markets are not necessarily in equilibrium, but take some time to adjust to shocks, such as demand shifts, leading to oscillatory dynamics of prices and quantities. The paper presents the model structure and the estimation of its parameters from international statistics on production, trade, forest area, and forest stock. This is followed by an application of the GFPMX to the impact on the global forest sector of the economic recession caused by the COVID-19 pandemic.

Markov decision process models were extended to reflect some consequences of the risk attitude of forestry decision makers. One approach consisted of maximizing the expected value of a criterion subject to an upper bound on the variance or, symmetrically, minimizing the variance subject to a lower bound on the expected value. The other method used the certainty equivalent criterion, a weighted average of the expected value and variance. The two approaches were applied to data for mixed softwood–hardwood forests in the southern United States with multiple financial and ecological criteria. Compared with risk neutrality or risk seeking, financial risk aversion reduced expected annual financial returns and production and led to shorter cutting cycles that lowered the expected diversity of tree species and size, stand basal area, stored CO2e, and old-growth area.

Long-term effects of policies to induce carbon storage in forests were projected with the Global Forest Products Model. Offset payments for carbon sequestered in forest biomass of $15–$50/t CO 2 e applied in all countries increased CO 2 sequestration in world forests by 5–14 billion tons from 2009 to 2030. Limiting implementation to developed countries exported environmental damage from North to South, as developing countries harvested more, decreasing their stored CO 2 e. Substantially more CO 2 e was sequestered by allocating a given budget to all countries rather than to developed countries only. As offset payments increased wood prices relatively more than they decreased production, timber revenues generally increased. In the few countries with timber revenues losses they were more than compensated by the offset payments.

ARTICLE I NFO We assessed the impact on the world forest sector of a progressive elimination of illegal logging. The analysis compared predictions from 2007 to 2020, with and without a gradual reduction of illegally logged industrial roundwood from 2007 to 2011. A large part of the curtailment of timber supply due to the stoppage of illegal logging would be compensated by increased legal production incited by higher prices. As a result, without illegal logging the world annual production of industrial roundwood would decrease by no more than 1%, even though it would decrease by up to 8% in developing countries. World prices would rise by 1.5 to 3.5% for industrial roundwood and by 0.5 to 2% for processed products, depending on the assumption on illegal logging rates. World consumer expenditures for wood products and producer revenues would rise by 1 to 2% without illegal logging. World value added in forest industries would remain the same. However, the changes in consumer expenditures would be more than double the changes in producer revenues in countries dependent on illegally logged timber of domestic or foreign origin such as Indonesia and China. Symmetrically, changes in producer revenues would be almost twice the changes in consumer expenditures in countries with little illegal logging and efficient industries, such as Canada, Germany and the United States. Value added in forest industries would decrease most in countries with heavy illegal logging (12% in Indonesia and up to 9% in Brazil), and it would increase most in Germany, Canada (4%), and the United States (2%). Without illegal logging, the world forest inventory would increase slightly, as the increase in developing countries would more than compensate the decrease in developed countries.

Three studies of the global economic implications of eliminating illegal logging are summarized. Processors of illegally sourced wood would lose from the elimination of illegal logging through high prices for logs and decreased production of wood products. Associated with these changes could be losses in employment and income. Beyond these losses to the processing industry, eliminating illegal logging has positive effects on sustainable forestry practices, and economic, environmental and social values in countries with illegal logging. The effects of illegal logging also extend beyond the countries in which illegal logging occurs. In almost all countries without illegal harvests the elimination of illegal logging is predicted to lead to significant increases in the price and production of wood products. This suggests that an economic incentive exists for legitimate producers in all countries to support measures to reduce illegal logging.

Russia is the world's largest exporter of roundwood, mainly to China, Finland and Japan. The Russian government recently announced an increase in its export tax on softwood roundwood from the present 6.5% of export product value to 80% by January 2009. The effects of this policy on the world forest sector to 2020 were simulated with the Global Forest Products Model. The predicted results were lower Russian roundwood exports and prices, lower global wood supply and higher world roundwood prices. In response, the USA, Germany and New Zealand would increase production and export of roundwood. Major consumers of Russian roundwood would suffer a reduction in production and export of wood products. By 2020 Russian harvests and roundwood exports would be 49 million m3 (19%) and 51 million m3 (50%) lower, respectively. The price of roundwood in Russia would be 16% lower. This would encourage a modest increase in Russian forest product production: 1–3% higher. However, Russian export revenues would be US ...

We assessed the impact on the world forest sector of reducing the risk of exotic pest spread by curtailing the roundwood trade. The analysis compared predictions from 2006 to 2015, with and without a gradual ban of roundwood exports between 2006 and 2010. With a ban on roundwood trade, world consumer expenditures for wood products and producer revenues would rise by 2.2 percent and 1.9 percent respectively. World value added would remain unchanged. However, producer revenues would decrease for the main log exporters (16 percent for the Russian Federation, and 10 percent for New Zealand). Value added would decrease most for the main log importers (13 percent in Japan, 7 percent in Korea, and 4 percent in China). Although the global cost of banning roundwood trade seems modest compared to the cost of catastrophic pest invasions, its varying effects on countries must be taken into account in forging equitable policies. SUMMARY

The objective of this study was to project the effects on the world forest sector of eliminating quickly all import tariffs. The projections were done for two scenarios: (1) progressive tariff reduction according to the current schedule of the General Agreement on Tariffs and Trade; (2) complete elimination of all tariffs within the Asia-Pacific Economic Cooperation (APEC) countries. The projections were obtained with the global forest products model (GFPM), for the years 1998–2010. The model gave market equilibrium projections of quantities produced, consumed, imported and exported for each of 180 countries, and for 14 commodity groups, covering roundwood, sawnwood, wood-based panels, pulp and recycled fibers and paper and paperboard. The model also projected world equilibrium prices. The results showed that, with or without ATL agreement, the world consumption and trade of all forest products would continue to grow along the historical trends, and the world prices of forest products would increase moderately. With the elimination of tariffs in APEC countries, the projected world production and consumption of all products would change little (less than 0.5%). The tariff reduction effects would be larger for trade, and the commodity composition of world trade would shift from raw materials to more processed products. The timber harvest would change in a number of countries, but the net effect at the world scale would be small. While the US consumption and production of forest products would change little, the US would reduce its export of logs and increase exports of most processed products. The US timber harvest was expected to be indistinguishable compared to what it would be in the absence of the Accelerated Tariff Liberalization agreement.

Uneven-aged silviculture in loblolly pine ( Pinus taeda L.) stands has many economic and ecological benefits. Here, the consequences of various uneven-aged management regimes are predicted with the SouthPro simulator. Results indicate that target distributions for pines with residual merchantable basal areas of ≈12.5 m 2 ha −1 , maximum diameters of ca. 40 cm, and q -ratios of 1.2–1.25 for 2.5 cm DBH classes are likely to provide high economic returns on good sites when combined with hardwood control. Increasing this maximum diameter would enhance tree-size diversity, but reduce sawtimber production and profits. Retaining a hardwood component with 1.15–2.3 m 2 ha −1 of basal area could enhance tree-species diversity, but this too would result in moderate reductions in income. Insisting on maximizing tree-size diversity or tree-species diversity among softwoods, soft hardwood, and hard hardwoods would be quite costly in terms of lost income and production. Results also illustrate how short-term economic incentives can lead to high-grading practices, despite substantial reductions in stand productivity and net returns in the long term.

A parsimonious model of capacity expansion is proposed for the United States paper and paperboard industries. The work grows out of Tobin's q theory, which suggested that the ratio between market value and replacement cost of capital is crucial in investment decision making. The model assumes that firms in the two industries are price takers, with a marginal cost of production equal to the average cost. The q values for the paper and paperboard industries were calculated as the ratios of the shadow price of existing capacity to the cost of new capacity. Annual data from 1958 to 1988 were used for estimation, with static and dynamic models of capacity changes. The results showed that a single dynamic equation using the q ratios alone explained most of the gross changes in capacity in both the paper and paperboard industries of the United States during the period considered.

The objective of this study was to estimate wood and fiber utilization by product, and the corresponding input-output coefficients in countries where only the total input and output are known and where the production statistics missing or wrong. The method gives wood and fiber utilization accounts in close agreement with the reported statistics, and consistent with prior knowledge of consumption functions and of production technologies. The first step estimates the consumption of final products in countries that have obvious errors or no data. This estimation predicts consumption from GDP and population. The second step estimates for each country the input-output coefficients from raw material to product, while adjusting statistics on production, if necessary. A goal-programming model keeps the difference between the estimated and the official statistics as small as possible, while maintaining input-output coefficients within plausible bounds. The results give a full account of the wood and other fiber utilization in each country, together with input-output coefficients and measures of the conversion efficiency.

This chapter shows an application of the global forest products model (GFPM) to predict the effects of economic shocks on the forest sector over time, by product and by region. The chapter uses the slowdown in economic growth, dubbed as the “Asian crisis,” as a case study. The Asia-Pacific region is a significant producer and a large market for forest products. In the late 1990s, it was expected that Asia would soon be a leader in the global forest sector, but the crisis has lowered the demand for forest products in Asian markets. Imports of industrial round wood by Japan decreased markedly in 1998. Prices for market pulp also dropped sharply. Effects of Asian economic crisis on wood-based panels, wood pulp, paper, and paperboard from 1998–2010 are demonstrated. The chapter also provides annual effects of the Asian crisis on world prices of industrial round wood and end products, predicted with the GFPM. The chapter concludes with the fact that the crisis effects are not only limited to the Asia-Pacific region, but also to the countries all over the world. The world demand and production were lower from 1998 to 2010 due to the Asian economic crisis.

This chapter provides an overview of the global forest products sector, with a summary of the main trends in production, consumption, trade, and prices of forest products in major world regions during the past 40 years. It is these variables and their trends that the global forest product model (GFPM) is meant to extrapolate for one or two decades. The world's forest products sector is shaped as much by external economic, political, and demographic trends as it is by forces working within the sector itself. Forest products are categorized into five major groups: round wood, sawn wood and sleepers, wood-based panels, total fiber furnish, and paper and paperboard. The world demand for forest products, from fuel wood to paper, has been rising steadily for the past 40 years. Yet there is much variation in these trends by product and by region. Economic and demographic growth in individual countries is critical determinant of those trends. Trade agreements are primary instruments in international and national forest policy issues.

This chapter presents a simulation analysis of the impact of U.S. timber harvest policies on Pacific Rim timber markets and forest resources. The international environmental impact of U.S. timber policy depends on other countries' policy responses and local management decisions. It outlines current trends in forest policy in the United States. The chapter discusses the modified version of the global forest products model (GFPM) to predict how U.S. policies affect other countries' markets and forests, particularly in the Pacific Rim. The results suggest that increasing timber harvest restrictions in the United States would shift timber production and forest products manufacturing to other countries and would significantly alter timber trade patterns. Softwood log markets would be most affected. The restrictions would allow the United States to conserve more forest, while other countries would conserve less. The chapter concludes that most of the transfer in timber production would be among developed countries with extensive coniferous timber resources.

This chapter presents structure of the global forest product model (GFPM), expressed by equations that link the variables of the forest sector. The model structure is based on the neoclassical theory of competitive markets. The GFPM is designed mainly as a policy analysis tool to project the general future trends in quantities and prices at different stages of transformation under different scenarios. The GFPM integrates the four classical major components of forest sector models: timber supply, processing industries, product demand, and trade. Each year, equilibrium is computed by maximizing the global “net social payoff,” while year-by-year changes are simulated by recursive programming. The model shows how production, consumption, imports, exports, prices, and welfare are likely to change in response to changing economic environments. GFPM simulates dynamic market equilibrium for the global forest sector. The products in the GFPM may be primary products, such as industrial round wood; end products , such as sawn wood, panels, and paper; intermediate products , such as pulp; or recycled products .

This chapter summarizes the results, discusses the strengths and limitations of the current version of the global forest products model (GFPM), and the prospects for improving the design and applications of the GFPM and of similar models. The GFPM understands and manages the world forest economy. The GFPM is one of the few truly international forest sector models, providing a full description of forest production, wood manufacturing, and end product demand, with detailed coverage of individual countries and commodity groups. The model can be used as a forecasting tool, to project future production, consumption, trade, and prices with a particular economic growth scenario. It can be a powerful means of policy analysis, for various trade and environmental issues, and can also be a way to understand better the interactions between parts of the forest sector. The GFPM recognizes that competitive advantage trade theory applies only to interindustry trade. It also models the intraindustry trade. An important feature of the GFPM is that it can handle extreme conditions, such as the one that might happen from input error, and yet not fail.

This chapter provides the information necessary to use the global forest products model (GFPM) software and to modify the database and the parameters. The chapter discusses the steps required to install the GFPM, interpret the base-year input data, which GFPM uses to forecast production, consumption, imports, exports, and prices, run the GFPM from the GFPM Menu, interpret the projection output from the GFPM, and carry out a welfare analysis from two GFPM scenarios. The GFPM requires a PC, at least 8 MB of RAM, and the Windows NT, Windows 2000, or Windows XP operating system. The GFPM uses the PELPS IV (price endogenous linear programming system) software, a general economic modeling system. Base year is the year from which the projections begin. The GFPM uses Microsoft Excel to organize base-year input data. The welfare analysis component of the GFPM allows estimation of welfare impacts of an alternative scenario compared with a base scenario.

Publisher Summary This chapter develops a rigorous and comprehensive economic model of the global forest sector and applies it to measure the effects on the global forest sector of: unexpected economic shocks, such as the Asian economic crisis; trade policies, such as changes in tariff rates in various countries; and environmental policies, such as recycling and timber harvest limits. The chapter describes a method, global forest products model (GFPM), to simulate how the forest sector operates in different countries, and how the countries interact through international trade. The forest sector includes timber production and harvesting, manufacturing in various industries, and transportation of products from forest to industries and to markets. The purpose of GFPM is to predict how, by how much, and when production, consumption, imports, exports, and prices of forest products may change, depending on external or internal forces and policies such as economic growth, global trade liberalization, and new environmental policies governing either the use of forest products or the management of forests.

This chapter applies the global forest products model (GFPM) to a base scenario that is meant to predict the most likely changes in the world forest sector and to serve as a base for comparison with other scenarios. The base scenario presented in the chapter gives detailed projections for all products from 1997 to 2010, with the assumptions listed. GFPM compares results from different scenarios to assess the likely magnitude of changes in forest sector variables resulting from policy, macroeconomic shocks, or management decisions. The chapter concludes that the global forest sector has expanded greatly during the last three decades, and trends show rising production, domestic consumption, and trade. The base scenario projections based on the assumed gross domestic product (GDP) growth rates, round wood supply shift rates, and other model parameters show that the consumption, production, and trade of forest products would continue increasing over the next decade. Price projections suggest that the real price of industrial round wood would increase slowly over the next decade. The projected consumption, production, trade, and prices depend on GFPM parameters and assumptions, such as demand elasticities, input–output coefficients, GDP growth rates, and the round wood supply shift rates.

This chapter discusses the application of the Global forest products model (GFPM) to predict the impacts of the Accelerated Tariff Liberalization (ATL) of the General Agreement on Tariffs and Trade (GATT) on the global forest sector, and especially the United States. The original version of this study was done in collaboration with the USDA Forest Service, in preparation for the meeting of the world trade organization in Seattle in 1999. The chapter reviews the Uruguay Round of GATT, and the ATL proposal to remove import tariffs on forest products in countries of the Asia-Pacific Economic Cooperation (APEC) organization. The ATL proposal covers all forest products, such as logs and wood products, pulp, paper, and paper products. The GFPM model was used to simulate an accelerated tariff liberalization scenario. It summarizes the effects of eliminating tariffs, from 1998 to 2010, for industrial round wood and for paper and paperboard. The chapter concludes that the ATL would have minor effects on global production, consumption, and prices but some perceptible effects on trade and prices. The welfare of consumers would rise, while that of producers would decrease.

Already supplying an estimated 27% of the world’s industrial roundwood,timber plantations have the potential to produce much more over the coming decades.This article explores the role of timber plantations in timber supply and forest conservationthrough 2010. Harvest projections from a forest sector model are comparedto a recent estimate of plantation timber production to assess plantations’ likelycontribution to timber supply in major timber-producing countries. Results suggestthat, in most countries, plantation production is unlikely to increase enough to reduceharvest pressure on natural forests.

Experience with a hierarchical world model of production, consumption, and trade Global Forest Product Model (GFPM), with Asia-Pacific as a subregion, confirms that equilibrium theory is a powerful way of getting coherent forecasts of many interacting forest economies. The GFPM model has produced forecasts at country and commodity level that are useful for Food and Agriculture Organization of the United Nations (FAO) global and regional outlook studies. However, several areas of improvement exist. The modeling work has revealed many shortcomings of the basic national statistics. The regional submodels are currently being replaced with a single model considering all countries simultaneously. The econometric demand equations can still be improved, especially their price elasticities. International econometric wood supply equations are almost nonexistent, and alternative models of wood supply need to be developed. The description of technology by activity analysis is powerful, but the comparative cost of production in different countries can be improved. The dynamics of trade flows and capacity expansion still require adjustments and perhaps new theory. Still, operational regional and global forest sector models are now available to individual analysts, giving them the means to produce their own forecasts, based on alternative scenarios of global growth and forest policies.

Background: Planted forests are increasingly important in world forestry, natural resources conservation, and climate change policies. There is great interest in their potential for carbon sequestration and conservation of natural forests while they remain an essential source of fuelwood and industrial roundwood. Methods: A method was developed for estimating the importance of planted forests in the global forestry sector. This was based on calculation of a global economic equilibrium with or without planted forests, using an adaptation of the Global Forest Products Model (GFPM) to simulate wood production in seven regions representing a total of 180 countries. The GFPM was then used to calculate production, consumption, trading balance, and price of forest products in 2009. Results: The utilisation of planted forests was estimated to reduce prices of forest products by 24 - 37%, and those of manufactured products by 4 - 14%, depending on the level of processing. World production of fuelwood was 4% greater due to the utilisation of planted forests, and industrial roundwood production was 14% higher. Conclusions: Although an increase in the level of consumption of end products was noted for all regions, production was sometimes lower if the effect of reduced prices was greater than the effect of the increase in wood supply. Nevertheless, the gain in global financial benefit to consumers far exceeded the loss of producer profits, leading to an estimated net gain of US$10,000 ha -1 in net present value at 2009 prices. Furthermore, planted forests reduced roundwood harvesting from natural forests by 26%, thereby contributing to ecological benefits such as carbon sequestration and biodiversity conservation.

An explanation was sought of the different growth of the paper and paperboard industries in regions of the United States. To that end, a theory of regional demand and supply was formulated. Elasticities of regional production with respect to important supply and demand factors were then calculated by econometric methods, with data for the period 1950–78. These elasticities were used, together with the observed average annual percentage changes of the corresponding variables, to determine the contribution each had on the growth of production. The results indicated that demand was the major factor causing the differences in growth rates. The rapid growth of paper and paperboard production in the regions of the South and West was spurred mostly by high economic and demographic growth in their market area. Supply (cost) factors, and the price of paper substitutes, were found to have played a minor role in comparison.

The growth of the share of particle board production (measured as a fraction of total wood-based panels) has been analyzed using data from 25 industrialized countries. The trends in each country during the period 1955–1973 were represented by logistic models, analysis of which suggested the following conclusions. The particle board share of panel production was expected to reach a long-term maximum which could be estimated for most industrialized countries; this maximum varied widely from country to country. In most countries, except for Canada, Finland, Sweden, and the United States, the particle board share seemed close to having reached its long-term maximum in 1973. Countries in which the particle board share grew more initially slowly tended to be those in which the long-term maximum share was higher. The long-term maximum share of particle board was significantly lower in eastern European countries than in market economies. Using information from the other 21 countries allowed inferences regarding the long-term growth of particle board in Canada, Finland, Sweden, and the United States where particle board is still a small part of total panel production. Increasing distance from the Democratic Republic of Germany, which initiated particle board production, and the availability of a large supply of roundwood have generally delayed the time of adoption of particle board. Other things being equal, the growth rates of the particle board share of total panel production appeared to be higher in countries with high economic growth and lower in countries with high wood availability.

This study presents an economic model for designing and selecting an optimal reforestation program. Given an initial set of resource and policy constraints, the model permits the user to select simultaneously the best set of reforestation projects to execute, the method of reforestation to employ, and the best initial stocking in new plantations. The model was developed for use by managers of large-scale, public land reforestation programs in the Douglas-fir Region of the Western United States. Results of the study include a package of linked computer programs which provides a completely automated procedure for designing and selecting a reforestation program. The programs have the following functions: The first program, FOREST, simulates a regime of harvests in plantations consistent with the goal of maximizing present net worth subject to specified constraints. It also generates a set of production functions which describe in terms of present net worth per acre the relationship between number of trees at age ten years and the cost of obtaining that number of trees. The second program, REGEN II, first calculates the present net worth per acre of alternative reforestation techniques (hand planting, aerial seeding, and natural regeneration) which can be applied to a particular tract of land. Then the same program uses a linear programming model to select the set of tracts, techniques, and initial stocking density which maximizes the present net worth of the whole reforestation program within a set of multiple constraints imposed by available projects, budget, seeds, and seedlings. A third program, FINAL, lists all projects recommended for reforestation in the current year, method of treatment, seeding density or initial spacing in plantations scheduled for hand planting, and resource requirements.