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Lundmark, R., Lundgren, T., Olofsson, E. & Wenchao, Z. (2020). Meeting challenges in forestry: improving performance and competitiveness. S-WoPEC Scandinavian Working Papers in Economics
Open this publication in new window or tab >>Meeting challenges in forestry: improving performance and competitiveness
2020 (English)Report (Other academic)
Abstract [en]

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.

Place, publisher, year, edition, pages
S-WoPEC Scandinavian Working Papers in Economics, 2020
Series
CERE Working Papers ; 2020:10
Keywords
Data envelopment analysis; forest sector; economic modelling; partial equilibrium; network; integrated assessment.
National Category
Economics
Research subject
Economics
Identifiers
urn:nbn:se:ltu:diva-78776 (URN)
Funder
Swedish Research Council Formas, 213-2014-184Swedish Energy Agency, 42197-1Swedish Energy Agency, 39740-1
Available from: 2020-05-05 Created: 2020-05-05 Last updated: 2020-05-05
Olofsson, E. (2019). Regional effects of a green steel industry: Fuel substitution and feedstock competition. Scandinavian Journal of Forest Research, 34(1), 29-52
Open this publication in new window or tab >>Regional effects of a green steel industry: Fuel substitution and feedstock competition
2019 (English)In: Scandinavian Journal of Forest Research, ISSN 0282-7581, E-ISSN 1651-1891, Vol. 34, no 1, p. 29-52Article in journal (Refereed) Published
Abstract [en]

Forestry and forest industry sectors have vital roles for many regional economies. Consequently, it is important to understand how the introduction of the iron and steel industry (ISI) as a new large consumer of woody materials may affect existing feedstock markets. The use of metallurgical coal can partially or fully be substituted by refined biomass. To analyze the potential consequences of a new woody consumer on regional markets, three regions in northern Sweden and Finland are used as a case. A regional partial equilibrium model is developed, the Norrbotten County Forest Sector Model (NCFSM), and applied on three different scenarios. The purpose of the study is to analyze the intra- and inter-regional effects increased competition for woody materials may have on regional markets and on the economic well-being of the regions. The result suggest that the total welfare effect is relatively small, however, some regional welfare distributional effects are observed. Additionally, the price of roundwood will only be moderately affected if the ISI sector switch from fossil fuels to refined woody biomass. However, secondary woody materials, i.e. by-products and harvesting residues, will experience larger price shifts.

Place, publisher, year, edition, pages
London: Taylor & Francis Group, 2019
Keywords
Partial equilibrium modeling, forest sector model, roundwood, competition, steel industry, charcoal, optimization problem
National Category
Economics
Research subject
Economics
Identifiers
urn:nbn:se:ltu:diva-71658 (URN)10.1080/02827581.2018.1543445 (DOI)
Note

Validerad;2018;Nivå 2;2018-11-21 (svasva)

Available from: 2018-11-19 Created: 2018-11-19 Last updated: 2018-12-17Bibliographically approved
Olofsson, E. (2018). An economic study on forest resource competition: How market imperfections and increased competition affect woody feedstock markets. (Licentiate dissertation). Luleå: Luleå University of Technology
Open this publication in new window or tab >>An economic study on forest resource competition: How market imperfections and increased competition affect woody feedstock markets
2018 (English)Licentiate thesis, comprehensive summary (Other academic)
Abstract [en]

Forestry and forest industry sectors have vital roles in the economy, both on a national and regional level. Due to the significant role of these sectors on the economic system, it is important to understand how competition issues impact market outcomes. In this licentiate thesis, competition problems affecting woody feedstock markets have been examined from two different perspectives: (a) imperfect competition, and (b) increased competition. The overall purpose of the thesis is to analyze how these two different competition issues will influence woody feedstock markets; and hopefully the results can help to increase the general knowledge of the subject of competition.

To undertake this objective, three articles were written: (i) one review, (ii) one modeling, and (iii) one policy application; where the former examines imperfect competition, and the two latter, the implications of increased competition due to changing market conditions. The review article analyzed the competitive situation on forest product markets (i.e., roundwood markets). This was done by asking the general research question “What conclusions can be made from the research literature regarding the market characteristics for competitive forest product markets?” The study was motivated by the realization that the market condition may entail that forest product are subject to imperfect competition. A comprehensive article search was conducted using a number of different keywords on three different web-based search engines. The search was then expanded upon based on initial search results. The purpose of the first article was to review and assess the current state of knowledge relating to the competitive situation on forest product markets; and to increase the general understanding of how competition issues affect efficiency and allocation on forest product markets. In the second article, a regional partial equilibrium (PE) model was outlined and developed. The model, defined as the Norrbotten County Forest Sector Model (NCFSM), is comprised of three geographical regions in northern Sweden and Finland, and includes all the major forest industries in these regions and the iron- and steel industry (ISI) sector, a prospective wood user. The addition of the ISI sector represents a novelty in terms of modeling the value-chain of woody material in a Swedish context. Data for the NCFSM was collected from a combination of open sources, official national statistics, and personal correspondence with industry representatives. In the final article, the NCFSM was applied to assess how woody feedstock markets are affected by the introduction of the ISI sector to the marketplace. Three different market scenarios were formulated, and model output for each scenario was then compared to a business-as-usual baseline without the ISI sector.

The overall result of the thesis indicates that there are quite clear implications from either imperfect or increased competition on the market outcome. This result is not unexpected. However, to what degree these competition aspect currently or potentially influence feedstock markets are more ambiguous. The result of the review article is inconclusive. In the review it is suggested that this result may be due to regional rather than sectoral differences, and that the degree of market imperfection varies over time. It has been suggested that the exertion of market power will follow the general conjectures of the economy, meaning that imperfect competition outcomes are more prevalent during economic downturns. In the review it is also suggested that the size of the individual forest industry will influence market delineation, where an increased business activity will decrease the probability of an imperfect market outcome. That is, as the industrial operation becomes larger, the procurement of woody materials will become more important since the economic implications (i.e., losses) of running out of materials increase with production. Thus, larger forest industries come to be more occupied with acquiring woody materials, thereby maintain production and securing long-term profitability, then engaging in short-term profit maximization schemes. The results from the third article suggests that increased feedstock competition, caused by the introduction of the ISI sector, will raise feedstock prices. The welfare variable remained relatively unchanged over the three scenarios when compared to the baseline, though some regional welfare redistribution effects are observed. Prices for primary woody materials, i.e., sawlogs and pulpwood, will mainly experience small changes from increased competition. Secondary woody materials, i.e., harvesting residues and industrial woody by-products, will experience greater price shifts, up to 650%. This outcome leads to secondary woody materials being priced above pulpwood. Such a market outcome is highly improbable, since there are incentives for market actors to substitute the expensive commodities with a cheaper woody feedstock. The overall results can be interpreted as ii indicating the intrinsic conflict of increased demand for a finite resource that is already used; the improbability of the ISI sector substituting fossil fuels with biofuels; and the importance of inter-regional trade for optimal allocation of woody materials.

Place, publisher, year, edition, pages
Luleå: Luleå University of Technology, 2018
Series
Licentiate thesis / Luleå University of Technology, ISSN 1402-1757
National Category
Economics
Research subject
Economics
Identifiers
urn:nbn:se:ltu:diva-68410 (URN)978-91-7790-120-4 (ISBN)978-91-7790-121-1 (ISBN)
Presentation
2018-06-01, D770, Luleå tekniska universitet, Luleå, 13:00 (English)
Opponent
Supervisors
Available from: 2018-04-19 Created: 2018-04-18 Last updated: 2018-11-07Bibliographically approved
Olofsson, E. & Lundmark, R. (2016). Competition in the Forest Sector: An extensive review. In: Meeting Sweden's current and future energy challenges, Luleå: Luleå tekniska universitet, 2016: . Paper presented at Swedish Association for Energy Economics (SAEE) conference 2016, Luleå, August 23-24 2016.
Open this publication in new window or tab >>Competition in the Forest Sector: An extensive review
2016 (English)In: Meeting Sweden's current and future energy challenges, Luleå: Luleå tekniska universitet, 2016, 2016Conference paper, Published paper (Other academic)
Abstract [en]

In this article, an extensive litrary review is conducted to examine the competitive state of the woody feedstock market. The aim is to review and assess the current state of knowledge relating to the competitive situation on feedstock markets, and how this knowledge has been implemented in forest sector models. The results suggests that woody markets may be too complex to be adequately described by economic theory. That is, even though the theoretical description of the feedstock market suggest that it may be at risk for noncompetitive behavior, the simultaneous and continuous decisions made by the market actors may reduce the probability of this outcome. However, studies that have found noncompetitive feedstock markets indicate that the degree of market power exerted will vary over time. This may signal unstable collusive carell or that forest industries are only able to exert market power over feedstock markets during economic recessions. The review also indicates that a majority of forest sector models examined do not reflect upon the competitive situation on feedstock markets. However, some exceptions are noted. Finally, an alternative description of how to view the competitive situation on forest markets is presented, together with some general findings and policies implications.

Keywords
Competition, market failure, backstop market, LOP, forestry, forest sector
National Category
Economics
Research subject
Economics
Identifiers
urn:nbn:se:ltu:diva-60935 (URN)
Conference
Swedish Association for Energy Economics (SAEE) conference 2016, Luleå, August 23-24 2016
Available from: 2016-12-06 Created: 2016-12-06 Last updated: 2018-02-15Bibliographically approved
Lundmark, R., Wetterlund, E., Lundgren, J., Ouraich, I., Bryngemark, E., Zetterholm, J., . . . Andersson, S. (2016). Projekt: En hållbar omställning av energisystemet mot en ökad andel bioenergi. Paper presented at .
Open this publication in new window or tab >>Projekt: En hållbar omställning av energisystemet mot en ökad andel bioenergi
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2016 (English)Other (Other (popular science, discussion, etc.))
Abstract [en]

3 PhD projects: Markets and price formulation (LTU, economics); Technologies and value chains (Chalmers) and; Location and industrial change (LTU, energy engineering). The general system perspective has its starting point in the importance of biomass and bioenergy in the transition to a long-run sustainable energy system and to an efficient spatial resource utilization and production with increased value chains. Focus is on biorefineries. A spatial approach will be applied in combination with national energy system modelling in connection with technological development potentials and industrial applications is linked to the feed-stock supply as well as market and policy issues.

National Category
Economics Energy Engineering
Research subject
Economics; Energy Engineering
Identifiers
urn:nbn:se:ltu:diva-36273 (URN)d62ce193-52d2-4d90-ac51-c62ff55484df (Local ID)d62ce193-52d2-4d90-ac51-c62ff55484df (Archive number)d62ce193-52d2-4d90-ac51-c62ff55484df (OAI)
Note

Finansieringskälla: Public research programme (public); Forskningsprogram: Energimyndigheten; Belopp: 12 110 000,00 Svenska kronor; Publikationer: A Geographically Explicit Approach for Price Determination of Forest Feedstock under Different Next-Generation Biofuel Production Scenarios – The Case of Sweden; Status: Ongoing; Period: 01/09/2015 → 31/12/2018

Available from: 2016-09-30 Created: 2016-09-30 Last updated: 2019-06-26Bibliographically approved
Lundmark, R., Ouraich, I., Nolander, C., Andersson, S., Olofsson, E., Bryngemark, E., . . . Pettersson, K. (2016). Projekt: Storskalig utbyggnad av bioraffinaderier: Nya värdekedjor, produkter och effektivt utnyttjande av skoglig biomassa. Paper presented at .
Open this publication in new window or tab >>Projekt: Storskalig utbyggnad av bioraffinaderier: Nya värdekedjor, produkter och effektivt utnyttjande av skoglig biomassa
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2016 (Swedish)Other (Other (popular science, discussion, etc.))
Abstract [sv]

Utvecklingen av kommersiella bioraffinaderikoncept är av strategisk betydelse för Sveriges utveckling till en biobaserad ekonomi. Bioraffinaderier bidrar till att ersätta fossila med biobaserade råvaror. Dessutom bidrar de till en smartare användning av biomassa, ökat förädlingsvärde samt utvecklingspotentialen av nya bioprodukter. Tekniska potentialer och industriella tillämpningar sammanlänkas med råvaruförsörjning samt marknads-, innovations- och policyaspekter. Projektet är tvärvetenskapligt och omfattar integration av modeller som kan redogöra för samspelet mellan olika sektorer, som inkluderar geografiska variationer av utbud och efterfrågan av skoglig biomassa, och som kan fånga effekterna av förändrade marknadsvillkor och styrmedel. För modellintegrationen kommer verktyg tas fram för att underlätta kommunikation och återkoppling mellan de ingående modellerna. Projektet syftar till att generera ny kunskap och ett modellramverk för avancerade systemanalyser relaterade till (i) den svenska biomassa och dess roll i ett hållbart energisystem och (ii) industriell omvandling av processindustrin i riktning mot ett framtida bioraffinaderi branschen. Genomförandefasen bygger på tre uppgiftsområden.

Keywords
Bioenergi, Förnybar energi, Skog, modell integration
National Category
Economics
Research subject
Economics
Identifiers
urn:nbn:se:ltu:diva-36296 (URN)e4a8ce3c-8523-4d80-aeda-f2d660e7cf9c (Local ID)e4a8ce3c-8523-4d80-aeda-f2d660e7cf9c (Archive number)e4a8ce3c-8523-4d80-aeda-f2d660e7cf9c (OAI)
Note

Finansieringskälla: Public research programme (public); Forskningsprogram: Formas; Belopp: 7,00 Svenska kronor; Publikationer: A Geographically Explicit Approach for Price Determination of Forest Feedstock under Different Next-Generation Biofuel Production Scenarios – The Case of Swedena; Status: Pågående; Period: 01/06/2015 → 31/01/2018

Available from: 2016-09-30 Created: 2016-09-30 Last updated: 2019-06-26Bibliographically approved
Olofsson, E.An introduction to the Norrbotten County Forest Sector Model: Technical report for a regional partial equilibrium model.
Open this publication in new window or tab >>An introduction to the Norrbotten County Forest Sector Model: Technical report for a regional partial equilibrium model
(English)Manuscript (preprint) (Other academic)
Abstract [en]

The Norrbotten County Forest Sector Model (NCFSM) is a regional partial equilibrium (PE) model that includes all the current major forest industries in three geographical regions, and future prospective woody user (i.e., consumers) in the aggregated iron- and steel industry (ISI) sector. As an initial case, the three included regions are Norrbotten County, and the Rest of northern Sweden, and Northern Finland. The addition of the ISI sector represents a novelty in terms of modeling the value-chain of woody material within the Swedish context, and more specifically in Norrbotten County. The primary purpose of this paper is to provide a detailed technical description of model assumptions, structure, and data input. While the NCFSM initially was developed to explore the effect of changing market conditions and increased feedstock competition, the model is well-suited to analyze a wide array of different research questions connected to the forestry and forest industry.

Keywords
Partial equilibrium modeling, Forest sector model, Roundwood, Competition, Steel industry, Optimization problem
National Category
Economics
Research subject
Economics
Identifiers
urn:nbn:se:ltu:diva-76031 (URN)
Available from: 2019-09-17 Created: 2019-09-17 Last updated: 2019-10-11
Organisations
Identifiers
ORCID iD: ORCID iD iconorcid.org/0000-0001-7303-7769

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