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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.

International environmental concerns have been expressed widely in concurrence with increasing trade liberalization, such as the agreements of NAFTA (North American Free Trade Agreement) and the Uruguay Round of the GATT (Esty 1994). The study reported in this chapter 1 was meant to test that environmental policies, especially in large countries like the United States, could have significant trade impacts and that as result they could be used, deliberately or not, as trade policies.

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.

This chapter describes the structure of the GFPM software. This chapter will help users with access to the GFPM source code to modify it to suit their needs. Other readers may skip this chapter, although even for them it can be useful for model debugging by tracing the model calculations over time. 1

The 21st century continues a trend of rapid growth in both international trade of forest products and a concern for forests. These two trends are connected. Forces causing trade growth are linked to the loss of native forest resources in some countries and the accumulation of nonnative forest resources in other countries. Factors increasing trade include relaxation of trade barriers, income growth, and improvements in wood growing, harvest, and manufacturing technologies. But environmental concerns are increasing as consumer preferences change, and as native forests recede and plantation forests become more prominent.

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.

The purpose of this GFPM application was to predict the potential effects of trade liberalization on the New Zealand forest sector. This study was part of a larger project commissioned by the New Zealand Ministry of Foreign Affairs and Trade to estimate the potential impact of trade liberalization initiatives on the New Zealand forest sector and regional economic development (New Zealand Forest Research Institute Ltd. 2001) 1 . The utility of the Global Forest Products Model in this type of study is that it provides the ability to analyze the New Zealand forest sector in an international context by considering the numerous and complex links between countries and between industries.

Model calibration refers to the definition of all countries and products, the choice of a base year, the assembly and checking of data for the base year, and the estimation of the various parameters of the global forest products model (GFPM). Validation involves comparing model prediction with actual outcomes in the past and judging the suitability of the model for different purposes. The version of the GFPM described in this chapter deals with 180 individual countries and 14 products. This level of resolution was chosen to facilitate data verification, since most international data are collected at the country level. Calculating projections by country also facilitates review and criticism of the projections, because expert knowledge is more available at the country level than at more aggregate regional or global levels. Making projections for most of the countries in the world instead of for only a few aggregated regions or main countries was required by the Food and Agriculture Organization of the United Nations (FAO). The forest products considered in the GFPM correspond to product groups used by the FAO in its statistical work.

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.

We investigate the reliability of transferring benefit estimates of forest recreation obtained from discrete choice CV data and conditional on forest-specific attributes. The transfer reliability is checked against the forest-specific estimates of mean and median willingness to pay. We report and discuss the outcomes of formal tests of the null hypothesis of no difference for 26 recreational forests in Ireland, when the value transfer is based on single and double-bounded data collected at the remaining 25 forests. Contrary to the unconditional value transfers of Downing and Ozuna [6] we find that value transfers conditional on site-specific recreational attributes are mostly transferable.

The long-term financial and ecological effects of diameter-limit regimes and basal-area-diameter-q-ratio (BDq) regimes were compared by simulation in the case of northern hardwood forests. Varying the cutting cycle between 10 and 20 years had little effect on returns or stand structure. A 28-cm diameter-limit cut gave the highest production and financial returns, and the highest species diversity, but considerably lower size diversity. A 38-cm diameter-limit cut and a heavy BDq selection harvest gave high returns, while maintaining high levels of diversity. On lands of equal site quality, Michigan’s stands were more productive than Wisconsin’s. The results suggest that it is possible to manage northern hardwood stands sustainably with diameter-limit cuts, combined with removal of poorly performing understory trees. Adjusting the diameter limit gave rise to stands similar in productivity and structure to those obtained by BDq cutting regimes. Given their simplicity of implementation and monitoring, more attention should be given to diameter-limit cutting regimes, with attendant stand improvement measures, as a practical means for uneven-aged management of northern hardwoods.

Data from a large scale contingent valuation study are used to investigate the effects of forest attributes on willingness to pay for forest recreation in Ireland. In particular, the presence of a nature reserve in the forest is found to significantly increase the visitors? willingness to pay. A random utility model is used to estimate the welfare change associated with the creation of nature reserves in all the Irish forests currently without one. The yearly impact on visitors? economic welfare of new nature reserves approaches half a million pounds per annum, exclusive of non recreational values.

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.

A Markov-chain model was developed to predict the development of forest stands and landscapes. Applied to the Wisconsin maple-birch forests, it incorporated stochastic biological growth and prices. Transition probabilities between stand states were obtained with a non-linear matrix growth model, by Monte-Carlo simulation. Shannon’s index measured tree and species diversity in each of 64 possible stand states. The frequency distribution of stand states throughout the maple-birch forest type measured the landscape diversity at different stages of forest development. Steady-state results showed that stand state 28 would dominate the landscape of an unmanaged forest, with or without catastrophic disturbances. Akin to old growth, state 28 had a high tree size diversity, high basal area in saw timber of shade tolerant and less tolerant species, and an expected residence time of 148 years. The landscape diversity of unmanaged forests increased as the period between natural catastrophes decreased from 1200 to 100 years, but then declined again with a period of 50 years. Continuing the current management regime, defined by the data of the last two forest inventories, would lead to a steady-state maple-birch forest with twice the landscape diversity of an unmanaged forest, but the proportion of old growth stands would be 4/5 lower, size diversity of trees 1/3 lower and species diversity slightly lower. The current management produced a low income, about $4/year on the average acre in the steady state, and an average current land expectation value of $l20/acre. Part II deals with improving economic returns without ruining diversity.

The rapid economic and demographic changes in the Asia-Pacific region during the past twenty years, have led to several studies of the Asia-Pacific forest sector. These have been intended to help government policy makers, forest industrialists and investors understand recent changes and foresee major future trends. This article summarizes some recent studies of the authors and their associates (FAO 1997; Zhang et al. 1997a, 1997b). It analyzes past trends and present forecasts of the future demand, supply and trade of forest products in the Asia-Pacific region.

Part I of this paper presented a Markov-chain model of the growth of maple-birch forest stands, and applied it to predict the consequences of natural and human disturbances on diversity of tree size and species, diversity of landscape, and income. Part II extends the analysis with a Markov decision process model to seek optimum management policies. An unconstrained economic harvesting policy gave more than five times the returns of the current management regime, with the same long-run landscape diversity and diversities of tree size and species less than 10% lower. Achieving maximum species diversity demanded harvesting, it lowered landscape diversity and gave about the same size diversity, with a third of the income of the economic policy, though nearly double that provided by continuing the current policy. Maximum tree size diversity could be nearly achieved by letting nature take its course, but this would entail giving up all income, and having a landscape half as diverse as that obtained by continuing the current policy. Compromise policies were found by maximising expected discounted returns with harvests that kept stands above a specified lower bound of diversity. Raising the lower bound on either the diversity of tree species or size decreased the other economic and ecological criteria. From an economic viewpoint, it was less costly to increase species diversity than size diversity because cutting large trees tended to increase species diversity. Setting high lower bounds on tree size diversity led to high opportunity costs and low landscape diversity.

EVALUE, A FORTRAN program was developed to provide a framework for cash flow analysis of investment opportunities. EVALUE was designed to assist researchers in evaluating investment feasibility of new technology or new manufacturing processes. This report serves as user documentation for the EVALUE program. EVALUE is briefly described and notes on preparation of a data deck are provided. Sample program input, sample output, and a complete listing of the program are provided. (Author)

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.

This paper reports on the possibility and difficulties in building growth models from past Forest Administration records on cut and growth in the Italian Alps. As a case study, a matrix model was calibrated for uneven-aged forests in the Valsugana valley of the Trentino province. The model gave reliable predictions over 30 years, and plausible long-term forest dynamics, including steady-states that are similar to virgin forests. The results support the view that the current forests are deeply altered as to composition, relative to what would obtain from natural growth. They also support the concept of long cyclic changes in natural stands, gradually approaching a climax state. Shortcomings of the data are that they do not come from an experimental design, they are not always accurate, and they must be supplemented with other information, especially concerning mortality. Still, these cheap and available data can lead to workable models adapted to local conditions, with many management applications.

Dans le Jura, de nombreuses forêts présentent une structure inéquienne correspondant à un mélange intime d'arbres de tous les âges. Cette structure n'est en général pas remise en question. Le propriétaire peut cependant poursuivre différentes stratégies visant par exemple un objectif purement économique, ou bien la plus grande diversité des arbres, ou bien encore un compromis entre ces deux orientations. Il apparaît intéressant, dans un tel cadre, de déterminer, pour chaque stratégie, l'état qui caractérise le mieux à long terme, ainsi que la récolte associée. Une telle démarche nécessite que soit au préalable construit un modèle de croissance. C'est ce qui a été fait à partir des données de gestion de 44 parcelles forestières décrites, à partir de la distribution des arbres en 27 catégories d'essences et de diamètres (3 catégories d'essence et 9 classes de diamètre pour chacune d'elles), par leur état à deux dates différentes ainsi que par les coupes et la mortalité survenues dans l'intervalle de temps correspondant. Le modèle a été valide par des simulations à court terme (20 ans) et long terme (500 ans). L'état stationnaire le plus proche de l'état moyen des parcelles considérées a été déterminé par la programmation linéaire puis pris comme référence. Puis les états maximisant, pour des coupes effectuées tous les 5 ans, l'efficience économique, avec ou sans contrainte de rentabilité, ont été calculés. Les stratégies de compromis permettent de garantir une rentabilité acceptable tout en maintenant une assez forte diversité. La démarche utilisée permet aussi de donner des règles simples pour convertir au mieux un état actuel en un état objectif jugé plus intéressant.

International audience

Econometric analysis of the forest sector : an overview of the American experience Begun in the I960' s, the development of quantitative models of the American forest sector has gone through several stages. One of the reasons for the success of this approach has been the recent willingness of the American Forest Service and of forest industries to promote these models and to use them. This article reviews some of the works that illustrate this evolution. Future progress should include more analytical work with simple and rigorous models., Commencé dans les années 60, le développement de modèles quantitatifs pour le secteur forestier américain a traversé plusieurs phases. L'une des raisons du succès de cette approche a été la volonté récente de l'administration et de l'industrie forestière américaines de promouvoir ces modèles et de s'en servir. Cet article recense quelques travaux qui illustrent cette évolution. Les progrès futurs devraient accentuer les travaux d'analyse avec des modèles simples et toujours plus rigoureux., Buongiorno Joseph. Analyse économétrique du secteur forestier : un bilan de l'expérience américaine. In: Cahiers d'Economie et sociologie rurales, N°15-16, 2e et 3e trimestres 1990. Économie de la forêt et offre de bois. pp. 145-166.

Le modele de Faustmann resume l'application des principes economiques fondamentaux au choix des modes de traitement sylvicole et des usages concurrents du fonds. Le prix des produits est un facteur cle pour l'application de ce modele. En ce qui concerne les prix du bois les modeles de secteur forestier etablissent un lien entre la foresterie et le reste de l'economie et constituent ainsi un moyen de predire les prix du bois en coherence avec les projections demographiques et la croissance economique. Pour prendre en compte la valeur des autres fonctions de la foret, la theorie de Faustmann doit etre elargie a l'aide de l'analyse couts-avantages. En l'absence de marche des amenites forestieres, l'evaluation pose dans ce cas un defi conceptuel et necessite la mise en oeuvre de techniques analytiques particulieres telles que l'evaluation contingente. Les nouvelles methodes de prevision de la valeur et de la demande fondees sur la theorie macro-economique de la croissance, essaient d'etablir un lien entre la demande de biens environnementaux, tels que la diversite forestiere, et la consommation totale agregee. Les modeles, fondes sur l'hypothese de la courbe environnementale de Kuznets, pourraient procurer un moyen de calculer la valeur des amenites forestieres et de predire leur demande future.

It is more economical to manage red pine plantations in Wisconsin for pulpwood and sawlog combined rather than for pulpwood only, even on low quality sites. The most important factor influencing the economics of a plantation is land quality. On lands of site index 45 new plantations are unlikely to be economical, regardless of management regime. Lands of site index 60 to 75 have real rates of return of 4 to 5.5% per year and soil expectation values of $125 to $350 per acre at 3% interest. Planting densities of 8 by 8 ft followed by heavy thinnings at long intervals and short rotations are best, but rotations may be increased considerably with only small effects on the economics of the plantations. North. J. Appl. For. 3:118-123, Sept. 1986.

A statistical method of appraising timber is presented. It consists of predicting the high bid of a particular timber offering under competitive conditions and adjusting this value to reflect uncertainty and the goals of the selling agency. Using data from the Chequamegon National Forest in northern Wisconsin, it was found that a simple linear model using 14 variables explained 93% of the variance in high bid for competitive sales from 1976 to 1980. This model predicted well post-sample high bids for 1981 and 1982. Based on this model, three possible definitions of appraised value were investigated: (1) predicted high bid, (2) predicted high bid minus one standard error, and (3) predicted high bid minus two standard errors. The consequences of each definition on timber sales, had it been applied in 1981 and 1982, were examined. Definitions (1) and (2) would have increased receipts by 28 and 5%, while decreasing the volume sold by only 5 and 3.6 %, respectively. Definition (3) would have led to the sale of approximately the same volume, but a decrease in receipts of 26%. North. J. Appl. For. 1:72-76, Dec. 1984.

Income and price elasticities of demand for coniferous and nonconiferous sawn wood, plywood, particle board, and fibreboard were estimated using yearly data from 43 countries, over the period 1963–1973. A static and a dynamic model were estimated by analysis of covariance and generalized least squares. The simpler technique, analysis of covariance, gave satisfactory estimates for both models. Demand for all products was found to be price inelastic, with long-term elasticities ranging from −0.1 for particle board to −0.2 for coniferous sawn wood. Price elasticities for plywood and nonconiferous sawn wood were not significantly different from zero but this result might only reflect price-data inadequacies. Long-term income elasticities were +0.7 and +0.5 for coniferous and nonconiferous sawn wood, respectively. Demand for all wood-based panels was income elastic, with long-term elasticities of +1.0 for plywood and fibreboard, and of +2.3 for particle board. The results indicated that in discussing elasticities of demand for forest products, the length of the time period should be specified. Full adjustment of demand to changing prices and income was shown to always take more than 1 year. Demand for fibreboard appeared to adjust most rapidly to changes in economic conditions; the demand for nonconiferous sawnwood adjusted most slowly.

Four time series of monthly prices of oak and softwood lumber and flooring are analysed using the autoregressive integrated moving average technique. The principles of the method are exposed and one model is estimated for each time series. The steps in model formulation, estimation and diagnostic checking are described in detail for the series of oak lumber prices. All series are stationary after a first order differencing. The behaviour of monthly prices of softwood products is well described by pure autoregressive models while the oak product prices require full autoregressive integrated moving average models. The models obtained generate one-month forecasts which are significantly more accurate than those obtained from a no-change extrapolarive model, except in the case of softwood flooring prices for which the behaviour is close to a random walk. Six-month forecasts are computed for each series with corresponding confidence intervals. An adaptive forecasting procedure is used to revise multiple-month forecasts after the errors on the first month forecast have been observed.

A gravity model was used (1) to synthesise the system of economic—and, to some extent, political—influences which determined the multilateral flow of tropical logs during the period 1967 to 1973 and (2) to evaluate the changes in the relative importance of these factors over time. Shipping distance was found to be the most important determinant of trade intensity, with lesser but significant roles being played by size of the importing country, relative price in the importing and exporting country, level of development and wood availability of the exporter and total volume of trade between countries. Trade preferences corresponding to old colonial ties played a minor, although statistically significant, role in determining the volume of log trade. The influence of most variables influencing trade was found to be stable over the period of observation, except for a systematic shift in the role of per capita income, reflecting a rapid movement of exporting countries towards domestic processing of logs.

Softwood lumber imports by the United States from Canada more than doubled during the past 10 years. The objective of this paper was to investigate two possible reasons for this change: (i) the increase in value of the U.S. dollar relative to the Canadian dollar, and (ii) the rise in the price of softwood lumber in the United States. The method used was time-series analysis, leading to measures of feedback and long-term multipliers between imports, exchange rate, and U.S. price. The results, based on monthly data from January 1974 to January 1986, suggested that 68% of the rise in Canadian imports during this period was due to the rise in the price of softwood lumber in the United States. The exchange rate, however, was not found to have a significant effect on imports. The findings also indicate that the increase in imports has not led to a decline in the price received by U.S. producers.

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.

An economic model of the North American newsprint industry forecasts, over long time periods and by regions, the amount of newsprint produced, consumed, its price, and the quantities transported between regions. The model forecasts the same data for the main raw materials, pulpwood and wastepaper. The core of the model is a recursive quadratic programming system that simulates the behavior of a competitive industry. The model has been used to make 10-year forecasts of key variables describing the industry, based on specific scenarios on economic and demographic growth in the various regions of North America.

A model has been developed to evaluate long-term development strategies for the forestry sector of Indonesia. The model uses data for 26 regions of Indonesia, plus Japan and Singapore. The model consists of a mixed-integer program with goal programming variables. The objective function measures total costs which include harvesting, transportation, manufacturing, capacity expansion and cost of not meeting regional demand and export targets. The model variables represent the different movements of forest products at various stages of processing within and between regions. Goal variables measure deviations from domestic demand targets in each region and from export targets. Boolean variables are used to determine the economic location of one or two ports capable of handling Indonesia's exports to Japan. An application of the model is given to show the effect, keeping other variables equal, of altering the composition of Indonesian exports from logs only to 50% processed products and 50% logs.

A model of the North American pulp and paper industry developed previously by the authors was used to simulate the trade of wood pulp between various regions of Canada and the United States, to the year 2000, under three different scenarios. The base simulation assumed no change in trade policies or cost competitiveness between regions, concentrating on the effects of changes in population and income. Under these assumptions, it was found that Canadian exports to the United States would remain approximately constant until 1990, but then double by the year 2000, reaching 5 million tons per year. Meanwhile, exports to the rest of the world would decline by 40 percent, to 2.5 million tons. Total Canadian exports would increase by some 15 percent over the next 20 years. In the second set of simulations, an ad valorem tariff on Canadian pulp was assumed. This led to a sharp reduction in U.S. imports. However, this decrease of Canadian exports to the United States would be compensated to a large extent by increased Canadian exports to Western Europe. The third simulation assumed a sustained rise in manufacturing costs for the entire pulp and paper sector in Canada. This resulted, unexpectedly, to a rise in exports of pulp to the United States. The reason was a rise in paper and newsprint production in the United States that made it advantageous for U.,S. producers to import more Canadian chemical pulp.

To analyze monthly imports of softwood lumber in the United States, five alternative hypotheses have been formulated and tested with monthly data relating to the period January 1965 to August 1978. The selected hypothesis suggests that imported lumber is only an imperfect substitute for domestically produced lumber. In addition, the decision to import softwood lumber depends upon importers' expectations regarding future levels of construction activity, domestic and foreign prices of softwood lumber, and domestic price of other goods. Expectations are adjusted from month to month by a constant fraction of the relative difference between observed and previously expected levels of the variables. This hypothesis led to a model expressing imports in a given month as a function of construction activity and prices in the same month, and of imports in the previous month. The resulting model had good statistical characteristics and provided the most accurate postsample forecasts. The results indicated that imports are more responsive, in terms of partial elasticity, to the price of domestic softwood lumber than to any other factor. Other things being equal, a 10 percent rise in domestic price leads to a long-term 11.6 percent increase in imports. The same rise in import price, which might result from a 10 percent increase in foreign price or from an equal decline in the value of the U.S. dollar, leads to a long-term decline in imports of 4.5 percent only. A similar decrease in imports would result from a 10 percent increase in the price of other U.S. goods which behave as complements for imported softwood lumber. A 10 percent inflation in all prices tends to cause as increase in imports of 2.8 percent. Full adjustment of imports to changes in construction activity and prices takes some 2 months. Construction activity and price variation explain most of the seasonal fluctuations in softwood lumber imports. Residual monthly deviations captured by dummy variables indicate that, other things equal, imports tend to be higher in February, March, June, and July than during the rest of the year. Forest Sci. 25:641-655.

A model fitted to cross-sectional observations is proposed which links the growth of consumption of structural wood materials and paper and paperboard to the economic and demographic growth of developed and developing economies. It was found that the response of consumption per capita to a specific growth of income per capita decreases systematically as the level of consumption attained increases. The consumption functions, for both groups of products, differed significantly for high-income and low-income countries. A set of input-output relationships was also established to estimate the amounts of wood pulp and industrial roundwood required to produce specific amounts of structural and paper materials. Those relationships have significantly shifted during the period 1961–1971, indicating an improvement in the efficiency of raw-material usage by the wood-products industries. The full model was applied to calculate the levels of consumption and of raw-material requirements consistent with Timbergen's indicative world plan (Timbergen, J. 1976. Development and environment aims: an intuitive view. In World modeling: a dialogue. Editedby C. W. Churchman and R. O. Mason. North Holland, Amsterdam, pp. 55–61). Given Timbergen's targets for world economic and demographic growth, a considerable improvement would occur in the balance of consumption between developed and developing countries but consumption per capita of industrial roundwood equivalent would still be three times higher in developed countries by the year 2010. The main growth of industrial roundwood consumption would occur in the paper and paperboard industry which would consume 65% of the world output by the end of the period. Developing countries would by that time become the main market for paper and paperboard products.