Joseph Buongiorno

Importance of forest attributes in the willingness to pay for recreation: a contingent valuation study of Irish forests

Abstract Data from a large-scale (over 8000) discrete choice contingent valuation study with a follow-up are used to investigate the effects of the hedonic equation for willingness to pay for access to forest recreation in Ireland. Selected forest descriptors for recreational quality show meaningful impacts and signs through a number of probit models, representing a gradient of restrictions gradually moving from the bivariate probit with heteroskedasticity to the interval data assumptions. Significance and magnitude of parameter estimates are found to be stable across the investigated models. This result supports the hypothesis that value estimates from contingent valuation methods exhibit theoretically consistent relationships with important forest attributes.

International Demand Equations for Forest Products: A Comparison of Methods

The objective of this study was to compare different methods of estimating the demand equations of global forest sector models. Past applications have shown that model projections depend critically on the elasticity of demand with respect to income and prices. To measure the elasticity coefficients, nine groups of products were examined, ranging from fuelwood to paper and paperboard, in 64 countries. The analysis was done with panel data on consumption, price and income, from 1973 to 1997. Two alternative forms were hypothesized: a static demand model, and a dynamic partial adjustment model. The demand equations were estimated first with classical panel methods: ordinary least squares pooling of country data, least squares with country dummy variables, between group pooling and error-component models. However, rejection of the hypothesis of homogeneity of elasticities across countries led to the investigation of two shrinkage estimators: the Stein rule and the iterative empirical Bayes estimator. Within-sample predictions were carried out to compare the accuracy of each estimator. The Stein rule estimator, based on the static model, gave the smallest root mean square error. Nevertheless, because the Stein-rule estimates often had theoretically wrong signs and large variances, other estimators, although biased, were deemed preferable for policy analysis. In conclusion, pooling by ordinary least squares with country dummy variables was one of the most useful methods to obtain demand equations applicable to many countries. Furthermore, static models predicted demand better than dynamic models, conditional on price and national income.

An economic model of international wood supply, forest stock and forest area change

Abstract Wood supply, the link between roundwood removals and forest resources, is an important component of forest sector models. This paper develops a model of international wood supply within the structure of the spatial equilibrium Global Forest Products Model. The wood supply model determines, for each country, the annual forest harvest, the annual change of forest stock and the annual change of forest area. The results suggest that global forest area would decline by 477 million ha between 1999 and 2030, with the largest decline in Asia and Africa. However, global forest stock would increase by 25 billion m3, with the largest increase in Europe, and North and Central America. Higher global harvests and lower prices were predicted than those predicted in the past with exogenous timber supply assumptions.

The demand for paper and paperboard: econometric models for the European Union

Cost minimization theory suggests national demand equations for paper and paperboard in which demand is a negative function of the price of paper and paperboard, and a positive function of gross national product. A dynamic version of this model was estimated with data from European Union countries, for newsprint, printing and writing paper, and other paper and paperboard. Country-by-country equations proved unstable. Pooling the data across countries, with dummy variables to account for fixed country effects, led to well defined short-term and long-term elasticities with respect to price and gross national product. The hypothesis that income and price elasticities were the same across the European Union countries could not be rejected at the 1% significance level, for the three product groups. From 1969 to 1995, most of the growth in demand had been due to the growth in national product, while price increases had only a small negative effect.

Long- and short-term effects of alternative cutting regimes on economic returns and ecological diversity in mixed-species forests

Abstract A growth model is presented, which recognizes differences in tree species, quality and size. The model was calibrated with data from permanent sample plots in hardwood forests in Wisconsin, classifying trees in twelve sizes, each divided into high-value, low-value and non-commercial trees. The model predicted well the short- and long-term (steady-states) growth of stands, in terms of number, size and value of trees. This growth model was incorporated into a linear program to compare six cutting guides in terms of the soil rent and ecological diversity they would obtain in a steady state. A simple guide, cutting all trees of at least 41 cm every 15 years, led to a diversity that was nearly 95% of that of a natural stand, and a soil rent that was about 70% of the maximum achievable. High-grading the stand led to a negative soil rent and the lowest diversity among all six alternatives. These long-term, steady-state differences between cutting guides would be missed by analyses that relied on the forest value criterion, because forest value is determined largely by the initial stand state.

A multi-species, density-dependent matrix growth model to predict tree diversity and income in northern hardwood stands

Abstract A density-dependent matrix model of stand growth is presented. The model was calibrated with re-measured plots in the northern hardwood forests in Wisconsin. Trees were divided into shade-tolerant, intermediate, and shade-intolerant species in twelve diameter classes. Model predictions were tested against post-sample observations for short-term (15-year) and long-term (steady-state) accuracy. This growth model was then applied to study stand growth dynamics with and without management. Starting with the current average stand state, the predicted stand basal area of an unmanaged stand rose steadily to a maximum, dropped gradually, and finally reached a steady state. The time paths of basal area and tree size diversity were highly and positively correlated. Instead, tree species diversity decreased when size diversity and basal area increased, and vice-versa. When harvesting was introduced, it was found that more intensive harvest increased the diversity of tree species, while decreasing the diversity of tree size. A 20-year cutting cycle could produce higher economic returns than a 10-year cutting cycle, with similar size and species diversity. Harvesting most of the saw timbers every 20 years could be a good compromise between economics and tree diversity, at the stand level.

Effects of alternative management regimes on forest stand structure, species composition, and income: a model for the Italian Dolomites

Abstract The aim of this study was to predict the long-term effects of alternative management regimes for uneven-aged mixed-species forests in the Italian Dolomites, among the most beautiful in the Alps range. For this purpose, a non-linear matrix model of stand growth was estimated from re-measured stands, and the predictions compared with actual data. Then, long-term simulations were used to determine the effects of (i) extracting some mortality only; (ii) applying Susmels (1980) management guides; (iii) cutting only trees above a diameter limit, (iv) saving the beech, and (v) continuing the current harvest rate. The ecological criteria to evaluate the different management regimes were basal area and stand composition by tree species and size. The economic criterion was the net present value of the harvests. The results suggest that, for a 10-year cutting cycle, applying Susmels guide or a diameter-limit cut of 70 cm for conifers and 50 for beech would keep diversity of species and size equal to that of an unmanaged stand, though lowering basal area. Of the two, Susmels guide would give 25% higher income. However, income could be doubled by lowering the diameter-limit cut to 60 cm for conifers and 45 for beech. This would give the same basal area and species diversity, but decrease size diversity by about 6%. The policy that did not allow to cut beech resulted in stands that had less beech than those obtained by Susmels guide or diameter-limit cuts. Perpetuating the current cutting rate gave the highest tree size diversity, but lower species diversity and the lowest income. Of cutting cycles of 5, 10, and 15 years, the longest gave, other things being equal, the highest basal area and size diversity, slightly lower species diversity, but substantially lower income.

Forest sector modeling: a synthesis of econometrics, mathematical programming, and system dynamics methods

Abstract Quantitative analysis and forecasting of forest product markets began in the 1950s, based almost exclusively on pure time-series analysis. Since then, considerable improvements have been made in the theoretical basis of the models, the statistical methods of estimation, and the coverage of the data. Especially noteworthy is the exploitation of panel data in the analysis of demand for final products. To model the industry supply of intermediate and final products, however, activity analysis seems more promising than econometrics. It allows for a detailed description of the techniques of production, and, therefore, a better modeling of technical change than the econometric approach. This paper presents a class of models, currently used for policy analysis and forecasting, that present a blend of econometric and mathematical programming, with a dash of system dynamics. Econometrically estimated demand and supply functions are combined with activity analysis of production and transportation, into optimizers to calculate spatial equilibria in multi-product markets. The shadow prices of the optimization are then the key inputs in predicting capacity change by region and process, in system dynamics fashion, and based on Tobins q theory of investments.

Predicting the growth of stands of trees of mixed species and size: A matrix model for Norway

Abstract The objective of this study was to predict the growth of forest stands of mixed tree species and size with natural recruitment. The stand state was defined by the number of spruce, pine, birch and other broadleaved trees by hectare in 15 diameter classes from 50 to 750 mm. The change in stand state over 5 years was predicted with state-dependent matrices based on equations for recruitment, growth and mortality. The data came from 7241 plots of the National Forest Inventory of Norway, measured from 1994 to 2005. A short-term validation was carried out by comparing predicted and actual growth over 10 years on 416 plots not used in model estimation. The model was also used to predict the long-term growth of stands with different initial species composition and diameter distribution. Irrespective of the initial condition the same steady state resulted, with characteristics similar to those observed in stands that had been undisturbed for 75 years.

The global timber market: implications of changes in economic growth, timber supply, and technological trends

Abstract A partial equilibrium model was applied to the global forest sector in order to assess regional and global impacts of changes in economic growth, timber supply potentials, and technical trends. The model uses recursive price-endogenous linear programming and deals with eight geographical regions and 16 products. The base line projections of the model gave an average annual increase in global supply of industrial roundwood of 1.2% until the year 2010. The real price of sawlogs and sawnwood was found to remain approximately constant, whereas the prices of pulpwood and particles increased significantly during the first years, and then declined after the year 2000. The real prices of pulp and paper increased less than those of pulpwood and particles. The assumed variations in GDP growth rates had limited influence on quantities supplied and traded due to restricted timber supply potentials, but affected the real prices, especially of pulpwood and particles. Changes in the assumed timber supply potentials and technical change affected the real prices of pulpwood and particles significantly. Introduction of a price responsive timber supply also dampened the price peaks of pulpwood. Possible improvements of the methodology include empirical estimation of timber supply and of key parameters that determine capacity expansion, trade inertia, and technical changes.