CERE Working Papers,
CERE - the Center for Environmental and Resource Economics

Abstract: Improving the efficiency of the forestry sector will have an important impact on our possibility to attain long-term sustainability and mitigate climate change. In this study, attainable, and sustainable, efficiency improvements in the harvesting of forest products are analysed using data envelopment analysis (DEA). The price impacts of the efficient harvesting volumes are evaluated in a second step using a spatial forest sector model. The results indicate that the harvested volumes of forest products, both for the industry and energy sectors, can be significantly increased if a more efficient forest management is adopted. This supply-side effect will also result in general price decreases for sawlogs, pulpwood, fuelwood and harvesting residues. However, in certain counties, and for specific forest products, the estimated decreasing price effect from a more efficient forest management cannot fully offset the increasing price effect of the energy sector expanding its use of forest products. More forest biomass enters the market, which is need in the transition towards a bioeconomy, and the increased availability of forest biomass will restrict the price effect making investments in the bioeconomy more likely to be profitable.

Keywords: Data envelopment analysis; forest sector; economic modelling; partial equilibrium; network; integrated assessment

JEL-codes: D21; D22; Q41

25 pages, May 4, 2020

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