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Quantitative forest sector modelling includes many model parameters that are treated as being deterministic in the modelling framework, but are in reality often highly uncertain. Few studies have addressed the impacts of this uncertainty and the main objectives of this article are to quantify major market uncertainties in the Norwegian forest sector and analyse their impacts on the results of a forest sector model study for Norway. The uncertainties are derived from historical time series of the prices and exchange rates for international forest products, and their possible impacts are addressed by applying a Monte Carlo approach. A probabilistic approach in modelling is found to have significant impacts on harvest and forest industry production levels. When uncertainty is included, the relative standard deviation for modelled harvest levels varies from 15% to 45%, while for forest products the standard deviations vary from 30% to 80%. We conclude that the most important uncertainty factor for the Norwegian forest sector is the development of international forest product markets, and improved data on demand should be given high priority in future forest sector modelling development.

Reducing Emissions from Deforestation and Forest Degradation (REDD+) has been piloted in developing countries as a climate change mitigation strategy, providing financial incentives for carbon sequestration in forests. This paper examines the economic feasibility of REDD+ in community forests within two watersheds in central Nepal, Ludikhola and Kayarkhola, using data on forest product demand, carbon sequestration, carbon price and REDD+ related costs. The benefits of REDD+ are about $7994, $152, and $64 per community forest, per hectare of forest area, and per household in Ludikhola watershed compared to $4815, $29, and $56 in Kayarkhola watershed, respectively, under the business-as-usual scenario. Compared to the EU ETS carbon price ($10.3/tCO2e), the average break-even carbon price in community forests is much higher in Kayarkhola watershed ($41.8/tCO2e) and much lower in Ludikhola watershed ($2.4/tCO2e) when empirical estimates of annual expenditure in community forests are included in the analysis. The incorporation of annual expenditure estimates and opportunity cost of sequestered carbon (in the form of firewood prices in local markets) in the analysis suggests that community forests are economically infeasible for REDD+ at the prevailing carbon prices. The implication of our findings is that economic feasibility of REDD+ in community forests depends on the local contexts, carbon prices and the opportunity costs, which should be carefully considered in designing REDD+ projects.

This study evaluated the potential effectiveness of future carbon reserve scenarios, where U.S. forest landowners would hypothetically be paid to sequester carbon on their timberland and forego timber harvests for 100 years. Scenarios featured direct payments to landowners of $0 (baseline), $5, $10, or $15 per metric ton of additional forest carbon sequestered on the set aside lands, with maximum annual expenditures of $3 billion. Results indicated that from 1513 to 6837 Tg (Teragrams) of additional carbon (as carbon dioxide equivalent, CO2e) would be sequestered on U.S. timberlands relative to the baseline case over the next 50 years (30–137 Tg CO2e annually). These projected amounts of sequestered carbon on timberlands take into account projected increases in timber removal and forest carbon losses on other timberlands (carbon leakage effects). Net effectiveness of carbon reserve scenarios in terms of overall net gain in timberland carbon stocks from 2010 to 2060 ranged from 0.29 tCO2e net carbon increase for a payment of $5/tCO2e to the landowner (71% leakage), to 0.15 tCO2e net carbon increase for a payment of $15/tCO2e to the landowner (85% leakage). A policy or program to buy carbon credits from landowners would need to discount additions to the carbon reserve by the estimated amount of leakage. In the scenarios evaluated, the timber set-asides reduced timberland area available for harvest up to 35% and available timber inventory up to 55%, relative to the baseline scenario over the next 50 years, resulting in projected changes in timber prices, harvest levels, and forest product revenues for the forest products sector.

Using enterprise-level data from China's Northeast-Inner Mongolia state-owned forest area for the year 2004, this paper investigates the technical efficiency of forest product processing mills and the relationship between institutional and managerial practices and efficiency. A two-stage procedure proposed by Simar and Wilson (2007) is adopted. In the first stage, a bootstrapped data envelopment analysis (DEA) model is used to compute the efficiency scores. In the second stage, the bootstrapped DEA scores are estimated over a set of mills’ institutional and managerial systems and other characteristics with a bootstrapped truncated regression. The results show that there is a wide dispersion in the technical efficiency among mills. Private ownership, autonomy and mill size have statistically significant positive impacts on efficiency. These results provide support for the ongoing reform and implications for future development of this area.

Assumptions regarding landowner participation, whether mandatory or voluntary, are an important determinant in evaluating the implications of a carbon offset sales program. We modify an existing intertemporal optimization model of the US forest and agriculture sectors to allow optional involvement of private forest land in a carbon offset market and compare these results to a case in which all private land is enrolled. Our analysis of these two cases and various CO 2 e price levels indicate different responses in carbon stock and flux, forest land area and management, forest product prices, and forest conditions. The results suggest that the cost of sequestering carbon in US forests, using either a voluntary or mandatory carbon offset sales program, may be substantially higher than suggested by earlier studies.

The purpose has been to determine to what extent differences in net trade and revealed comparative advantage between EU member states could be explained by differences in forest endowments, domestic demand, energy policies and other country specific characteristics. An adopted model of the Heckscher–Ohlin theory, suggesting a direct relationship between a country's trade, forest endowments and income (HOV model), has been empirically estimated for three forest products (roundwood, chips & particles and wood fuel), 19 European countries and for the period 1994–2006. Both net export and an index of revealed comparative advantages was constructed and used as dependent variables. Moreover, different model specification was estimated using different measures of forest endowments. The results suggest that forest endowments are an important determinant for explaining differences in net trade of the included forest commodities. However, domestic demand, measured by income level, is not. Thus, the results provide mixed support for the HOV model.

The pulp and paper industry has experienced dramatic changes during the past several decades with large variations in world regional market shares of production capacity and consumption patterns. Based on panel data available (1961–2000) from the United Nations Food and Agricultural Organization , this paper estimates dynamic demand models for pulp and paper products in four major trading regions: Asia, Europe, the North American Free Trade Agreement Area, and South America. With or without price in the model, short-run demands are generally output inelastic. However, without price in the model, long-run output elasticities were more elastic, particularly in the Paper/Paperboard, Printing/Writing, and Household/Sanitary sectors with most elasticities greater than 1. With price included in the model, long-run demands were generally output inelastic, with primary exceptions being the Paper/Paperboard sector for all but the NAFTA region and Wrapping/Packaging for Asia and South America. Price was generally significant with long-run elasticities, in absolute value, in the (0.05, 0.11) range. And as a measure of urbanization, the percent of the population living in urban areas significantly affects consumption in total and in the Pulp and Printing/Writing sectors.

Time series data on forest product prices used in research is frequently the product of temporal, spatial as well as product aggregation. This paper analyzes the implications of the use of composite commodity price indices in cointegration analysis and tests the validity of the assumptions underlying it. It tests for the presence of a common stochastic trend in disaggregated softwood lumber product price series in multiple US markets, a validity condition supported by the Generalized Composite Commodity Theorem (Lewbel, 1996. Aggregation without separability: a generalized composite commodity theorem. The American Economic Review 86(3), 524–543.). The presence of a common stochastic trend in softwood lumber product price series tested is consistently rejected by Johansen's (1988. Statistical analysis of cointegration vectors. Journal of Economic Dynamics and Control 12(2–3), 231–254.) multivariate cointegration analysis. Together with rejection of non-stationarity property for a significantly large number of price series tested, the results highlight the significance of the assumptions underlying the use of composite forest commodity price indices for cointegration analysis.

This paper analyzes the determinants of participation in the extraction of xate palm, the most important non-timber forest product in the Mexican Lacandona Rainforest (Selva Lacandona) in terms of its contribution to cash income for households. Results show that low opportunity costs and low human capital, two strong correlates of rural poverty, significantly explain the degree of participation in xate extraction. This gives reasons to be moderately optimistic about the poverty-reduction potential of programs that successfully increase the price of xate received by extractors.

In this article, we investigate whether taxation of households’ production of marketed forest products in developing countries is likely to assist in achieving the general development objectives of resources conservation and poverty alleviation. Based on an empirical study on such taxation in a village in Tanzania, we develop and solve a theoretical analytical model to analyse taxation, when households’ access to alternative income generating opportunities is heterogeneous. Findings are that taxation adversely affects income equality and has an ambiguous effect on the level of resource utilisation.

This study examines heterogeneity in nonindustrial private forest owners’ timber supply by using a large panel data set of Norwegian landowners. The full sample is divided into more homogenous subsamples. We apply four econometric panel data specifications. Three of the specifications have seldom or never been applied previously in such a supply analysis. Interpretations and results for estimated slope parameters vary substantially between estimators. Supply responses differ considerably with respect to property size and across regions. Changes in roundwood prices and interest rates are the main determinants explaining the decrease in supply during the period 1989–1997. Future roundwood supply analysis should preferably account for heterogeneity in order to avoid inconsistent estimators that could mislead decision makers.

In a developing country such as India, the extraction of forest biomass by village households is a key management concern. A microeconomic model of the decisions regarding levels and sources of extraction of forest biomass is developed. Biomass extraction behaviour in a sample of 227 households living in, and close to, Ranthambhore National Park, India, is empirically examined. An empirical measure of spatial aspects of extraction is investigated. Village location, ownership of biogas, and caste are found to be key explanatory variables of forest biomass extraction.

Impacts of exchange rates on international forest products trade are widely debated, but the empirical evidence regarding this issue is still inconclusive. Here, we report findings of the impacts of the exchange rates on the main forest product imports and exports of the US, from January 1989 to November 2004. Export data consisted of monthly series of the main products exported by the US to different countries. For imports we used monthly series of the principal products imported by the US from Canada, the major source of imports. The strongest evidence was obtained by pooling the data across countries and products. In the short run, exports were very elastic with respect to the exchange rate (−2.6), while imports were moderately elastic (1.2). In the long run, the elasticity decreased but remained significant (0.5 for both exports and imports). Appreciation of the US dollar tended to matter more than depreciation, but the hypothesis that the effect of exchange rate was symmetric could not be rejected.

We examine the intensity of harvesting decision by non-industrial landowners at the lowest price offer they deem acceptable, using a multiple bounded discrete choice stated preference approach that draws upon and connects two subfields of forestry, one identifying characteristics of landowners important to past harvesting or reforestation decisions, and another proposing how landowners evaluate price offers for forest harvesting decisions. Variables important to harvest intensity choices when the landowners find an acceptable price have only been considered for those landowners who actually have participated in harvesting markets, whereas here we examine the behavior of these individuals as well as those who are on the margin (i.e., have not harvested at prevailing current or past market prices). We show that harvest intensity depends critically on the extent of urbanization, indicated by the presence of structures on a parcel as well as forested tract size, along with landowner characteristics such as absenteeism and length of ownership. The results are useful for understanding the timber management behavior for a majority of landowners who may not harvest at prevailing prices, but may participate should prices reach a level acceptable to them, where this level is determined by individual preferences for standing timber resources.

This paper analyses the effects of resin benefit on the optimal rotation age of Simao pine plantation. Timber growth and resin yield functions were first derived, and then an integrated formulation for Hartman rotation was solved by taking both timber and resin benefits into consideration through numerical optimization. Empirical results indicate that: (1) the inclusion of resin benefit results in lengthening optimal rotation age; (2) resin benefit has a greater effect on rotation age when discount rate is low than when it is high, ceteris paribus; (3) with an improvement of site productivity, resin benefit has a decreasing effect on rotation age, other factors being constant. These effects are also true with respect to benefit gains in present value.

The theory of demand and supply implies a positive relationship, or “price transmission” between the prices of products at different stages of manufacturing. This relationship was investigated with quarterly prices of softwood stumpage in the US South, and national prices of forest products, from 1977 to 2002. All prices, net of inflation, were found to be nonstationary and there was no evidence of co-integration between prices. Vector autogressive models, augmented by Granger causality tests and multiplier analysis showed that there was a one-to-one permanent positive response of the southern sawtimber stumpage price to a permanent change in the national lumber price. There was also a one-third permanent positive response of the national paper price to a permanent change in the national pulp price. There was no relation between regional pulpwood prices and national pulp or paper prices. When price transmission was significant, the full adjustment took about 2 years.