A GDR Module of the European Forest Sector Model

NOT FOR QUOTATION WITHOUT PERMISSION OF THE AUTHOR

A GDR MODULE OF THE E U R O P W FOREST SECTOR MODEL

Hans-Ulrich Brautzsch

September 1985 WP-85-39

Hochschule fiir 0konomie Berlin (DDR)

Working Papers

are

interim r e p o r t s on work of t h e International Insti- t u t e f o r Applied Systems Analysis and have r e c e i v e d only limited review.

Views o r opinions e x p r e s s e d herein d o not necessarily r e p r e s e n t those of t h e Institute o r of i t s National Member Organizations.

INTERNATIONAL INSTITUTE FOR APPLIED SYSTEMS ANALYSIS 2361 Laxenburg, Austria

FOREWORD

The o b j e c t i v e of t h e F o r e s t S e c t o r P r o j e c t

at

IIASA is

to

study long-term development a l t e r n a t i v e s f o r t h e f o r e s t

sector

on a global basis. The emphasis in t h e P r o j e c t i s on issues of major relevance

to

industrial and governmental policy makers in d i f f e r e n t r e g i o n s of t h e world who

are

responsible f o r f o r e s t r y policy, f o r e s t industrial s t r a t e g y , and r e l a t e d t r a d e policies.

The key elements of s t r u c t u r a l change in t h e f o r e s t industry

are

r e l a t e d

to a

v a r i e t y of issues concerning demand, supply. and international t r a d e of wood p r o - ducts. Such issues include t h e development of t h e global economy and population, new wood p r o d u c t s and s u b s t i t u t e s f o r wood products. f u t u r e supply of roundwood and a l t e r n a t i v e f i b e r s o u r c e s , technology development f o r f o r e s t r y and industry, pollution regulations, c o s t competitiveness. t a r i f f s and non-tarif f t r a d e b a r r i e r s ,

etc.

The aim of t h e P r o j e c t i s t o analyze t h e consequences of f u t u r e expectations and assumptions concerning such substantive issues.

The r e s e a r c h p r o g r a m of t h e P r o j e c t includes a n a g g r e g a t e d analysis of long-term development of international t r a d e in wood products. and t h e r e b y analysis of t h e development of wood r e s o u r c e s , f o r e s t industrial production and demand in d i f f e r e n t world regions. The analysis i s c a r r i e d out employing

a

global f o r e s t

sector

m o d e l f o r which t h i s a r t i c l e r e p r e s e n t s t h e d a t a of t h e German

Demo-

c r a t i c Republic.

Markku Kallio P r o j e c t Leader

F o r e s t S e c t o r P r o j e c t

CONTENTS

1. INTRODUCTION 1

2. THE INPUT4UTPUT MODEL OF THE FOREST SECTOR 9 3. A GDR MODULE FOR THE EUROPEAN GLOBAL FOREST SECTOR MODEL 11

3.1 Production 11

3.2 Consumption 15

3.3 International Trade and Market Inertia 21

3.4 Model Formulation 21

REFERENCES 25

A GDR MODULE

OF

THE

EUROPEAN

FOREST SECTOR MODEL

Hans-Ulrich Brautzsch

1. INTBODUCTION

The primary purpose of this p a p e r is

to

suggest how

to

include

a

module representing t h e f o r e s t s e c t o r * of t h e German Democratic Republic (GDR) in a Global Trade Model (GTM) (Dykstra and Kallio 1984). In this connection I intend t o discuss some c u r r e n t and prospective problems of t h e f o r e s t s e c t o r of t h e GDR.

A t t h e beginning l e t m e briefly illustrate why r e s e a r c h into long-term development of t h e f o r e s t

sector

of t h e GDR is v e r y important. Then I shall describe an input- output model, illustrating t h e conversion of

r a w

wood into final products, because this model is suitable f o r estimating t h e consumption levels of final products (sawn- wood, panels. p a p e r s and boards) used in model runs with t h e GTM in t h e version by Dobrinsky and Kallio (1984). Then I shall discuss the connection between an optim- ization model of t h e GDR f o r e s t s e c t o r and t h e GTM.

Research into long-term development in t h e f o r e s t s e c t o r of t h e GDR is con- siderable from various points of view:

1. t h e development of consumption,

2. t h e development of t h e

r a w

material base of t h e whole, 3. t h e development of f o r e s t r e s o u r c e s and t h e i r utilization.

4. t h e international t r a d e of f o r e s t products.

=According t o the view of Andersson st al, the forest sector comprises two major components:

forestry andtheforestindustry. The forest sector concept integrates allaspects connected wlth forests and their exploitation, i.e. activities ranging from timber growth to the use of end pro- ducts. Ecological, environmental, and socio-economic factors are included in this definition (Andersson et al, 1984).

From t h e beginning of human production activities wood h a s been of g r e a t importance. Wood w a s needed for t h e production of 200 goods 2.000 y e a r s ago, 2,000 goods in 1919, 4,500 goods in 1930, 10,000 goods in 1960 (Offner 1961), and, in t h e GDR, 12,000 goods in 1980. In 1980 wood w a s allocated

to

t h e following

so-

called consumption complexes*:

-

20% t o t h e consumption complex "housing",

-

17%

to

t h e consumption complex "transport and package",

-

16%

to

t h e consumption complex "education, information and science".

A s t h e saturation level i s not achieved, we e x p e c t rapid growth of t h e s e consump- tion complexes accompanied by increasing w o o d demand.

Wood i s one of t h e important domestic

r a w

materials of t h e GDR. A g r e a t number of o t h e r

r a w

materials have

to

b e imported. In connection with t h e p r i c e revolution f o r

r a w

materials and energy s o u r c e s a t t h e beginning of t h e 1 9 7 0 s

w e can

o b s e r v e a new economic a p p r o a c h t o w o o d . The r e a c t i o n s focused on identify- ing s t r a t e g i e s f o r a n e n l a r g e d use of wood

as

a n a l t e r n a t i v e

r a w

material. The extension of wood

use as

a construction material,

as

chemical

raw

material, even

as an

a l t e r n a t i v e e n e r g y s o u r c e (Langendorf 1981a) is u n d e r discussion. However, t h i s is a c o n t r o v e r s i a l issue. A f e a t u r e of t h e Industrial Revolution almost 200 y e a r s ago

was

t h e replacement of wood with so-called nonreproducible, depletable r e s o u r c e s . e.g. s t e e l , coal, c o n c r e t e . In comparison with wood, which depends on a biological reproduction p r o c e s s , t h e s e

r a w

materials were readily available. In t h i s way i t was possible t o overcome t h e limits of economic growth

set

by t h e

r a w

material base. To a c e r t a i n e x t e n t w e e x p e c t t h e opposite p r o c e s s in t h e distant f u t u r e . Nonreproducible, depletable r e s o u r c e s will b e p a r t l y r e p l a c e d with r e p r o - ducible (i.e. biological) r e s o u r c e s . However, t h e i n c r e a s e d use of wood is very important f o r t h e f u t u r e , when o t h e r

r a w

material s o u r c e s will b e depleted.

In this connection w e have

to

consider t h e following problem. On the one hand, biologically speaking, wood is exhaustible because i t is reproducible. On t h e o t h e r hand, economically speaking, wood is exhaustible because i t may b e used up unless

w e

give i t t h e c h a n c e

to

r e p r o d u c e . Avoidance of t h i s e f f e c t implies long- t e r m r e s t r a i n t s in o r g a n i c production in f o r e s t r y . That

w a s

t h e c a s e in t h e GDR.

Especially from t h e beginning of t h e 1930s

to

t h e beginning of t h e 1950s t h e wood h a r v e s t exceeded t h e annual growth (Figure 1). The f o r e s t stock decreased rapidly. Hence i t w a s n e c e s s a r y

to

r e s t r a i n t h e annual c u t (Figure 2). In t h i s period ranging up

to

1966 imports had t o b e increased rapidly

to

satisfy t h e need (Figure 3). Since 1966 t h e annual c u t s h a v e been i n c r e a s e d parallel with t h e f o r e s t stock (Figure 4). In 1984 t h e growing stock i s 179 m3/ha (Riithnick 1984).

The annual c u t p e r h e c t a r e i s about 4

m3

and t h e annual accumulation i s o v e r 2 m3/ha (Kurth/Lucas 1980). The accumulation is n e c e s s a r y

to

improve t h e s t r u c -

ture

of f o r e s t stock, especially t h e a g e distribution. In Tables l a and 1 b w e s e e t h e differences between t h e c u r r e n t and t h e optimum a g e distribution of t r e e s resulting from t h e overcutting 35-50 y e a r s ago. The differences a r e significant f o r t h e main

tree

s p e c i e s , pine and s p r u c e . The long-term consequence is

to

h a r - v e s t l a r g e numbers of

trees

in young a g e classes.

In this connection t h e t h i r d a s p e c t , t h e development of

forest

r e s o u r c e s and t h e i r utilization, i s discussed. In general,

w e

have t h r e e possible ways

to

c o v e r t h e increasing demand:

-

i n c r e a s e s in t h e d e g r e e of utilization of wood grown,

=By so-called "consumption complexes" we understand a network of similar consumption a c t i v i t i e s .

-

i n c r e a s e s in organic production p e r h e c t a r e and time unit,

-

i n c r e a s e o r d e c r e a s e of exports.

Today only 50-55'2 of t h e grown f o r e s t biomass is used. In t h e f o r e s t industry only 50-60'2 of t h e used wood goes into final products. On t h e whole from t h e grown wood 25-35'2 i s efficiently used (Langendorf 1981a). Up t o 2000 w e expect t h e clos- ing of t h e cycle of w o o d utilization,

so

t h a t increase in organized production p e r h e c t a r e and time unit i s t h e only way

to

c o v e r t h e increasing demand. To achieve a higher organic production, intensification

measures

(raising t h e fertility of soil and productivity of stands, optimization of

tree

s t r u c t u r e , breed of new

tree

species etc.) have

to

b e extended. On t h e whole. t h e r e will b e a n i n c r e a s e in increment amounting

to

3 m3/ha and within t h e time horizon of a doubling of t h e volume of timber c u t p e r unit of

area

in 100 y e a r s (Figure 5). This amount consid- ers lowered organic production

at

t h e expense of securing t h e social functions of f o r e s t (Kurth/Lucas 1980). To utilize these possibilities of increasing organic production we have

to

consider t h e time lag between expenditure and r e s u l t s revealed in i n c r e a s e s in grown wood.

The t h i r d possible way

to

c o v e r t h e increasing demand f o r w o o d is t h e exten- sion of foreign t r a d e . Since t h e beginning of t h e 1950s t h e import of w o o d and intermediate products h a s increased continuously (Figure 3). accompanied by a n increasing e x p o r t of f o r e s t final products, especially f u r n i t u r e . To investigate t h e prospective level of foreign t r a d e of

forest

products

w e

have t o consider t h e development of international t r a d e of products, t r a d e b a r r i e r s , market inertia,

etc.

This will be done in Chapter 3.4.

t ^{Mill m}

³

RAW WOOD PRODUCTION

ANNUAL GROWTH

1. Development of raw wood production and annual growth in Germany between

1936 and 1945. (Source: Grottian 1948).

2 S t ~ c t u r e or wood production in the CDR (Source: StatistCcaL Yeatbook of the G D R l m 4 ) .

FIGURE

J. Reduction and consumption or raw wood and lntermedlate produots.

(P = production, C = consumption).

(Souroes: Statistloal Yearbook or t h e GDR, varlous years. Statistical Year- book or CMEA, various years).

1mi11.

- - - r - - - ' ^rn3

^RAW --- ^WOOD

^--'

--

I I

A

mi\[. m3

SAWN WOOD

11000 ton

CHEMICAL PULP

1 1 ~ 0

ton

M ECHANlCAL PULP

A

DO0 ton

PAPER 8 BOARD

RAW WOOD PRODUCTION

^.

t RAW WOOD PRODUCTION

t

^{mill. m3 m3/ ha}

PER HECTARE

t FOREST STOCK

m3/ ha

PER HECTARE

^.

RAW WOOD PRODUCTION

I

m3/ capita

PER CAPlTA

4. Development of r a w wood production, and forest stock in the GDR. (Sources:

Statistical Yearbooks of the GDR, various years. Ruethnick 1904.)

TABLE la. Structure of tree species. (Source: Langendorf 1982).

Conifers 77% Deciduous t r e e s 23%

Pine 54% Beech 7 %

Spruce 21% Oak 5%

Larch 1 % Other species 11%

Other species 1%

TABLE lb. Age distribution of trees. (In brackets: the optimal age distribution.) (Sourae: Langendorf 1982).

Pine Spruce Oak Beech Total

FIGURE 5. Development of annual growth, forest stock and raw w o o d production.

(Source: KurtWLucas 1984) mYha

220

-

200

-

180

-

160

-

OPTIMAL FOREST STOCK

DEVELOPMENT OF FOREST STOCK

m4ho.a 40

1

2. THE INPUT-OUTPUT MODEL OF THE FOaEST SECTOR

The Input-output model of the

w o o d

and timber complex d e a l s with p a r t

of

the f o r e s t sector

as

defined by Andersson et

al.

It is concerned with t h e main lines of

the w o o d

flow wlthin

the

national reproduction process, beginning with the

r a w w o o d

production and ending with t h e production of final p r o d u c t s such

as

furni- ture. The segregated input-output model has

69

sectors. the a g g r e g a t e d model h a s

14

sectors (Table

2).

Each sector i s c h a r a c t e r i z e d by

a

technological input-output coefficient

% j

indicating t h e amount of commodity

i

that i s required to p r o d u c e o n e unit of com- modity

j.

The set of such input-coefficients can be assembled into a n input-output matrix

where

Pj is the

g r o s s product of commodity

j

and

&j

i s

the

r e q u i r e d input of com- modity

j.

Forming t h e s t a t i c balance requirement for t h e f o r e s t sector

w e

g e t

where

p

=

P j

and

y

= i s

the

final demand of t h e f o r e s t r y and timber complex, defined to b e exogenously determined final demand of individual consumer, govern- ment, investment, n e t e x p o r t demand and demand for intermediate products f o r such industries, which are not in t h e product classification of t h e input-output model.

?ABLE 2.

Product

classification in t h e inputoutput modeL (Source:

Brautzsoh

1984~).

Raw

w o o d

Sawnwood Chemical pulp Mechanical pulp Fibreboard Particleboard Veneer

Furniture

Wood-based package Construction

P a p e r s

&

Boards

Musical instruments/playthings/

sports

kits/cultural a r t i c l e s

Other wood-based final products

The solution of t h e equilibrium s t r u c t u r e p essentially amounts

to

t h e calcula- tion

The v e c t o r r e p r e s e n t s t h e non-used wood residues

as

w e l l

as

t h e whole input of waste p a p e r .

The model's importance i s t h a t i t makes calculations with t h e aim of estimating effective variants of allocation of w o o d

to

c o v e r t h e increasing demand f o r f o r e s t final products. In t h i s s e n s e m o d e l estimations can b e used

to

c r e a t e a b e t t e r understanding of t h e interdependence between t h e activities from timber growth and t h e use of end products. Test calculations in t h e Central Planning Bureau show t h a t t h e model i s suitable a s a means of fixing t h e proportions between production and final products. W e can a l s o obtain some analytical results:

1. If t h e main line of t h e flow of wood in t h e national economy is contained in t h e input-output table, i t is possible

to

estimate which p a r t of t h e g r o s s product o r t h e national income is based on w o o d . In 1980, 6% of t h e g r o s s product of t h e GDR i s based on wood.

2. W e can estimate t h e d e g r e e of t h e utilization of w o o d residues. In one row r e p r e s e n t s t h e input and output of w o o d residues. The difference between t h e input and output of residues indicates t h e d e g r e e of closure of t h e cycle of w o o d utilization.

3. W e can estimate t h e d e g r e e of finishing of t h e w o o d . This i s t h e recipro- cal number of t h e coefficients of t h e t o t a l expenditure of w o o d . The coefficient indicates t h e amount of commodity j t h a t is produced p e r unit of wood used.

The input-output m o d e l of t h e f o r e s t s e c t o r i s compatible with a n input-output model f o r t h e national economy as a whole.

3.

A GDR MODULE FOE W E EUROPEAN GLOBAL r o m s T SECTOR MODEL

The preliminary GTM (and t h e r e f o r e a l s o t h e GDR module) is a s t a t i c model f o r which t h e p a r a m e t e r s may b e

set

t o c o r r e s p o n d

to

a specific point in time, but dynamic development is simulated by executing a stepwise series of r u n s .

3.1 Production

Table 3 summarizes t h e conversion f a c t o r d a t a used in t h e GDR module.* Rows r e p r e s e n t both intermediate and final p r o d u c t s , and columns r e p r e s e n t conversion a c t i v i t i e s from raw materials

or

intermediate p r o d u c t s into final products.** Usu- ally f o r

a

single commodity t h e r e

are

s e v e r a l production a c t i v i t i e s r e f e r r i n g t o a l t e r n a t i v e technologies.

= I n p u t d a t a f o r c o n i f e r o u s a n d n o n c o n i f e r o u s w h i t e pulp m u s t b e c o n s i d e r e d t e n t a t i v e .

==In t h e f u l l e s t s e n s e of t h e w o r d w e m u d u n d e r s t a n d b y f i n a l f o r e s t p r o d u c t s g o o d s u s e d f o r con- s u m e r , g o v e r n m e n t , i n v e s t m e n t and e x p o r t demand (8.g. f u r n i t u r e , wood-based m u s i c a l i n s t r u - m e n t s ) . In t h i s s e n s e sawnwood, panels. p a p e r and b o a r d s a r e i n t e r m e d i a t e p r o d u c t s . In t h e i n p u t - o u t p u t model f o r t h e CDR, d e s c r i b e d i n t h e f i r s t p a r t of my p a p e r , t h e t e r m s " i n t e r m e d i a t e pro- d u c t s " and " f l n a l p r o d u c t s " a r e u s e d i n t h i s s e n s e . T o c o n n e d t h e CDR module w l t h t h e CTM w e h a v e t o u s e a s i m i l a r p r o d u c t c l a s s i f i c a t i o n and i d e n t i c a l t e r m s . In t h e following I c o n s i d e r sawn- wood, panels, p a p e r and b o a r d s a s f i n a l p r o d u c t s (Figure 6).

VENEER -,, CONSTRUC-

INDUSTRIAL P L Y W D TlON

ROUNDWOOD

-

^.

FUELWOOD

--

^PULP

flNAL PRODUCTS FINAL PRODUCTS

M THF GTM IN THF LO-T

. . . . . .

-

- . .

(D.DYKSTRA/ (BRAUR-XH m a 1 M.KALLIO ?W1 AND THE STATIC

LINEAR OPTlMlZATlON KIDEL OF THE GOR

HGUBX T h e d e f i n i t i o n o f t h e t e r m "final p r o d u c t s " .

r ;l

t -' 4 W

Nonooniferous logs Coniferous pulpwood Nonconiferous pulpwood

I

Coniferous sawnwood Nonconiierous sawnwood

Veneer and plywood

Particleboard/

fiberboard

Coniferous white pulp

Nonconiferous white pulp

Newsprint Other printing and

writing paper Household and sa ni ta q

Paper Packaging paper and

boards Reaycled paper

I t is necessary t o r e f e r

to

some special features of t h e GDR module:

1. In GTM a harvesting activity i s assumed

to

yield logs and pulpwood in fixed proportions. If s m a l l t r e e s a r e harvested t h e s h a r e of logs may b e zero. No explicit upper limit may be needed f o r the harvesting volume, because increasing marginal costs

are

used as s u r r o g a t e s f o r explicit timber supply constraints. In the GDR module

an

upper bound equal

to

t h e exogenously estimated maximum annual timber removals must be

set.

These possible maximum annual timber removals have

to

be estimated by f o r e s t management, using a long-range f o r e c a s t model of f o r e s t resources, in consideration of t h e development of f o r e s t stock and environmental issues. The scenario in Table 4 is assumed.

TABLE

4. S c e n a r i o 2000 (annual growth rate 1960-2000).

Coniferous logs 0.7%

Nonconif e r o u s logs 1.1%

Pulpwood 1.8%

Fuelwood OX

2. In GTM f o r a single commodity t h e r e

are

two o r t h r e e production activi- t i e s r e f e r r i n g

to

alternative technologies. These a r e : t h e c u r r e n t tech- nology, possibly divided into two efficiency categories, and a state-of- the-art technology

to

b e employed in new investments.

In t h e GDR module w e segregate technologies in t h e following way:

-

We consider a technology representing t h e sawnwood processing of small conifers. In future t h e processing of s m a l l coniferous

trees

will gain importance because t h e a g e s t r u c t u r e of coniferous t r e e s is not optimal. This technology will have a s h a r e of up

to

20% of t h e whole sawnwood production t o 2000.

For t h e production of veneer and plywood, fiberboards and particle- boards, coniferous and nonconif e r o u s white pulp, newsprint, o t h e r printing and writing papers, household and sanitary papers, packag- ing p a p e r s and boards two technologies

are

considered f o r e a c h , one r e f e r r i n g

to

c u r r e n t technology and t h e o t h e r t o a prospective technology. Generally w e expect a higher wood residue input in pulp and panel production and

an

increase of t h e

waste

p a p e r input in p a p e r and board production*.

I t

is t o b e considered t h a t in f u t u r e t h e processing of this wood o r faulty wood will influence t h e technological input coefficients s o t h a t positive effects resulting from t h e use of technological p r o g r e s s could possibly be eliminated.

We assumed t h a t up

to

2000 t h e i n c r e a s e of production will b e achieved by using modern technology (Table 5).

=In this connection i t i s interesting t o have a look at the input structure of the paper and board production (Figure 7). The share of waste paper has increased continuously. In comparison with advanced countries the share of waste paper input i s high (Figure 8). In 1980 the input of waste paper for the production of papers and boards amounted t o 600,000 tons. In the CDR the waste pa- per input i s only llmited by the maximal volume of the waste paper recycled. In 1980 i t was possi- ble t o recycle 1,060,000 tons. Therefore the reserve was 460,000 tons (Arnold/Rahn 1981).

( F o o t n o t e c o n t i n u e d . )

- - -

_, I _ _ - - - - _ _ _ _ - _ ; _ - _ _ - _ _ _ _ - _ 1 _ _ - - - _ _ - - - _ _ I

I ;WASTE PAPER

I I I

- - - I I - - -

- -

I

I

j

MECHANICAL :PULP

llCUBE 7. Input s t r u c t u r e i n X p e r t o n o f p a p e r s and boards.

% HASTE WPER IPRODVCT~ON OF

f

P*PERS AND BOARDS ⁶⁸

U) -

---

-.,- ---; - - - 7 - - - r

6.

WASTE WPER I CONSUMTKIN OF

1"

^PAPERS AND M M D S

9

---

-- ---- --- ---,

FlCUEE a T h e d e v e l o p m e n t o f t h e r e l a t i o n b e t w e e n w a s t e p a p e r i n p u t and p r o d u c t i o n and consurnp- t i o n o f p a p e r and b o a r d s i n s e v e r a l c o u n t r i e s .

TABLE 5. Development o f t h e Capaolty up to ZOO0 (Soenario).

Coniferous sawnwood (mill m3) 2,440 0,240

Nonconiferous sawnwood (mill m3) Veneer and plywood (mill m3) Panels (mill m3)

Coniferous white pulp (mill 0,33) Nonconiferous white pulp (mill ton) Newsprint (mill ton)

Other printing p a p e r s (mill ton)

Household and s a n i t a r y p a p e r s (mill ton) Packaging p a p e r and board (mill ton)

3. F o r raw w o o d allocation t h e following substitution activities h a v e been included:

-

t h e conversion of coniferous logs into coniferous pulpwood.

-

t h e conversion of nonconiferous logs i n t o nonconiferous pulpwood,

-

t h e conversion of coniferous pulpwood into fuelwood, and

-

t h e conversion of nonconiferous pulpwood into fuelwood.

3.2 Corwamption

In t h e GTM consumption r e f e r s

to

t h e

use

of f o r e s t p r o d u c t s outside t h e f o r e s t

sector.

Consumption of intermediate p r o d u c t s (e.g. sawnwood, pulp) outside t h e f o r e s t

sector

is assumed

to

b e negligible compared with t h e production of t h e s e commodities. Consumption of e a c h of t h e final p r o d u c t s (sawnwood, panels, p a p e r s and boards) i s given by t h e demand outside t h e f o r e s t s e c t o r .

A t f i r s t I

am

concerned with t h e estimation of t h e p r o s p e c t i v e level of con- sumption of sawnwood and panels. Then I s h a l l discuss t h e p r o s p e c t i v e p a p e r and b o a r d consumption.

To

estimate t h e p r o s p e c t i v e l e v e l of sawnwood and panel con- sumption w e must

-

c o n s i d e r t h e a c t u a l allocation of sawnwood and panels,

-

analyze t h e development of industries consuming sawnwood and panels,

-

deduce conclusions f o r t h e definition of s c e n a r i o s describing t h e pros- pective level of sawnwood and panel consumption.

Relevant d a t a f o r t h e allocation of r a w wood and intermediate p r o d u c t s and of so-called final f o r e s t products are summarized in Table 6. This shows t h a t a n important p a r t of sawnwood and panel consumption i s used f o r

a ) f u r n i t u r e , b) packages,

c ) building industry.

F i r s t i t i s c o n c e r n e d in fctniture production a n d consumption. In Figure 9 w e i l l u s t r a t e t h e development of

-

production,

TABLE d The allocation o f wood and i n t e r m e d i a t e products i n t h e CDR i n 1980. ( S o u r c e : B r a u t z s c h 1984d).

Distribution Distribution of intermediate products

of Raw wood

onsu sump ti on')

of intermediate products

=

^100%)

(consump tiona) of

r a w

wood=100%)

Furniture Wood- Paper & Construe- Musical Other final based & tion instrument final

package boards etc. ^b, productsc)

31.8% Sawnwoud 9.4% 18.6% 21.2% 3.2% 47.6%

2.2% Fiberbd 36.3% 3 2% 36.2% 1.8% 22.5%

10.9% Particlebd 86.6% 3.2% 10.2%

24.1% Chemical

P ~ P 69.6% 30.4%

4.6% Mechanical

P ~ P 100. 0% 0

0.8% veneerd) 96.1% 2.4% 1.5% 0

25.6% Other

a) C o n s u m p t i o n

-

Production

+

Jmport

-

^Export

b) Playthings, sports klts, cultural articles

C) N o t f o r p l y w o o d

d) Inclusive of remedy

-

s h a r e of export,*

-

regional export patterns,

-

input of sawnwood and panels p e r 1000 M furniture production.

The production of furniture has rapidly increased since 1955. Primarily. this i s because furniture export has expanded quickly. The export has been concen- t r a t e d on t h e

USSR

and Western Europe. The rapid growth of t h e production of furniture has been accompanied by increasing substitution of sawnwood f o r panels.

Today sawnwood i s used in no small measure f o r the production of upholstered f u r - niture and seat furniture. It is expected that domestic consumption as w e l l

as

the export of furniture will increase. On t h e basis of t h e past development of annual growth

rates

of furniture export and furniture domestic consumption w e have made t h e following scenarios up

to

²⁰⁰⁰ (Table 7).** In t h e f i r s t scenario a high annual growth r a t e of furniture export is assumed. The second scenario considers possi- ble t r a d e and market inertia and a higher annual growth

rate

of domestic consump- tion. The consequences of t h e demand f o r sawnwood and panels a r e given in Table 7. I t is assumed that t h e input of sawnwood and panels p e r 1000 M furniture pro- duction will decrease by one p e r cent p e r year.

*The i m p o r t o f f u r n i t u r e is a s s u m e d t o b e n e g l i g i b l e c o m p a r e d w i t h e x p o r t of f u r n i t u r e .

**In t h i s c o n n e c t i o n w e h a v e t o c o n s i d e r t h e f o l l o w i n g problem: i n f u t u r e a high level of sawnwood and p a n e l c o n s u m p t i o n will b e d e t e r m i n e d b y a high level o f f u r n i t u r e e x p o r t s . Hence on t h e o n e hand t h e high level o f sawnwood and p a n e l c o n s u m p t i o n d e t e r m i n e s , p o t e n t i a l l y , a n e g a t i v e s o l u t i o n i n t h e o p t i m i z a t i o n model, m a x i m i z i n g n e t e x p o r t s . On t h e o t h e r hand f u r n i t u r e c a n o n l y b e e x p o r t - e d if sawnwood and p a n e l s a r e i m p o r t e d . T h e r e f o r e when w e a n a l y z e t h e s o l u t i o n c o m p r e h e n s i v e l y ( C h a p t e r 3.4) w e h a v e t o c o n s i d e r t h e n e t e x p o r t s of f u r n i t u r e a n d o t h e r wood-based f i n a l p r o d u c t s a s well.

PRODUCTION OF FURNITURE

milliard H

5

+ ----.---

I - - - - 1

---

^----r$

FURNITURE EXPORT SHARE AND CONSUMTION SHARE

(wumximakly)

mo {3

^{I I}

PANEL AND SAWNWOD Nf'UT IN m3 PER 1000 M I

^{~ ~ O M O}

OF FURNITURE

^O

FIGUBE Q Furniture produotion. export, and input structure. (Sources: S t a t t s t t c a l Year6ook of the GDR, Various Years).

Figure 1 0 shows t h e development of packaging i n t e n s i t y a n d t h e s t r u c t u r e of packaging m a t e r i d s in t h e GDR. The packaging intensity i s t h e relation between t h e g r o s s national p r o d u c t and t h e production of packages. If production and consumption of packages

are

equal, t h i s coefficient shows how many

units

of g r o s s national product c a n b e packaged with one unit of packages.

P a p e r and b o a r d s and sawnwood are t h e main packaging materials in t h e GDR.

In comparison with advanced c o u n t r i e s in t h e GDR t h e s h a r e of wood-based pack- a g e s i s high (Figure 11). This i s due, among o t h e r things,

to

t h e f a c t t h a t wood i s one of t h e important domestic

r a w

materials. Other r a w materials used

for

t h e production of packages (metal, oil f o r t h e production of plastics) have

to

b e imported. I t i s expected t h a t

TABLE

7. Soenario 2000

-

Production of furniture. (Source: Stattstkal Yeadook of the CDR, various years.)

1960-70 1970-80 1980-83 2000

I I1

Rate of Annual Growth (X)

-

E x p o r t 18.9 9.1 12.0 1 0 8

-

^Domestic

consumption 3.5 6.3 -2.5 1.5 2

Demand of

-

sawnwood (1000 m3) 710 590

-

panels (1000 m3) 2210 1820

' ^I

I '

:

^{I I}

; I

¹

I I

I

:

packaging intensity

20

I I ^1I I ^1I , ^,I gross product

I I I I I production of pockinqs

FIGURE 1Q Paokaging intensity in the CDR (Source: Brautzsch 1984b).

-

t h e packaging intensity will s t a y constant

or

d e c r e a s e in f u t u r e ,

-

wood-based packages w i l l b e t h e main packages in t h e GDR in future,

-

t h e volume of sawnwood used

for

t h e production of packages will increase slightly up

to

2000 (0,5X p e r year).

A g r e a t p a r t of sawnwood and panel consumption is used in t h e b u i l d i n g i n d u s t ~ . In Germany t h e s h a r e of wood consumption in construction decreased continuously

in

t h e past (Breithaupt

et

al):

1907

-

1913 52.8%

1931 33.0%

Today t h e s h a r e is approximately 11%. In t h e past sawnwood was substituted through o t h e r materials, e.g. c o n c r e t e , aluminum, steel. An increasing demand for sawnwood and panels in construction is not expected. W e assume t h a t t h e demand will b e constant.

AUS

roo

'X I

,

I

I ^I I

I plastic

I '.rc

- I I I

'I

1 6 5 19b 1975 1980

100% ¹

I

I I I

I plastic

80 ⁹ I ^I

I I I 1

TRIA,

^metal

glass

LO wood

Papers

20 boards

80

11. Structure of packaging materials. (5ource: Brautzsch 1 W b )

In o r d e r

to

estimate t h e whole level of consumption of sawnwood and panels w e assume t h a t in f u t u r e t h e demand of sawnwood and panels f o r t h e production of

so-

called "other final products" (including remedies*) will b e constant. In this way w e

are

a b l e

to

fix t h e following scenarios of sawnwood and panel consumption on t h e whole (Table 8).

In o r d e r

to

estimate t h e prospective level of t h e consumption of panels and boards w e have

to

consider t h e following facts:

-

According

to

t h e p a p e r and board consumption p e r c a p i t a t h e GDR is among t h e 20 leading countries.

-

The produced

area

of p a p e r and boards (i.e. t h e amount expressed in

m2

) will increase more rapidly than the produced

m a s s

of p a p e r and boards (i.e. t h e amount expressed in tons) (Figure 12). The main f e a t u r e of t h e production s t r u c t u r e i s t h e high s h a r e of high quality technical p a p e r s so t h a t t h e

total

e x p o r t of p a p e r s and boards h a s t h e same value as t h e total import of p a p e r s and boards (Arnold/Rahn -1981).

Two scenarios

are

assumed: t h e annual growth

rate

of p a p e r and board con- sumption i s 1% and 0.5% (Table 8).

TABLE 8. Development of t h e Consumption Scenario Z W O .

Coniferous sawnwood (mill. m3) Nonconiferous sawnwood (mill. m3) Veneer and plywood (mill. m3)

Panels (fiberboard/particleboard) (mill m3)

Newsprint (mill ton) 0.184 0.166

Other printing and writing p a p e r s (mill ton) 0.250 0.226

Household and sanitary p a p e r s (mill ton) 0.079 0.072

Packaging p a p e r s and boards (mill ton) 10.194 1.082

.I am referring t o additional materials for the production processes.

FEUBE 1 2 Production of papers and boards: mass-area-relation. (Sources: Arnold

and Rahn 1981a. M a e r and Wolf 1980).

3.3 International Trade and Market Inertia

To r e p r e s e n t market inertia in t h e GTM w e may

set

upper and lower limits on t r a d e flows. Such bounds may account f o r c e r t a i n types of t r a d e policies

as

w e l l .

In t h e GDR module w e have to consider t h a t t h e GDR is

a

member of t h e COME- CON. According to t h e view of Dobrinsky/Kallio (1984) w e assume t h a t to satisfy t h e domestic needs most socialist countries encourage domestic production and t r a d e within t h e COMECON and would only import

f r o m

o t h e r world markets if domestic o r COMECON capacities

were

insufficient. It is also important to increase t r a d e with o t h e r regions in o r d e r to acquire, among o t h e r things, technological know-how. Foreign t r a d e in

forest

products is concentrated on

Western

Europe and Northern Europe, e x c e p t COMECON. Imports from and e x p o r t s of

forest

pro- ducts to o t h e r regions

are

negligible.

In general foreign t r a d e in f o r e s t products i s required to

meet

t h r e e main constraints:

-

total e x p o r t s have t o equal o r exceed an exogenously given budget,

-

total imports of f o r e s t products have to b e equal to o r smaller than a n exogenously given budget.

-

t h e net e x p o r t o r t h e net import have to b e limited to capitalist countries as w e l l as to COMECON countries.

3.4 Yodel Formulation

The initial assumptions in t h e GTM

treat

producers and t r a d e agencies within a region as s e p a r a t e entities, e a c h one of which t r i e s to maximize profit.

Dobrinsky/Kallio (1984) suggest t h a t from t h e point of view of

a

centrally planned economy, t h e total profit of all producers and foreign t r a d e agencies in t h e

country h a s

to

b e maximized.

Another possible objective function i s

to

maximize t h e n e t e x p o r t

to

capitalist and developing c o u n t r i e s under t h e c o n s t r a i n t s t h a t

-

t a r g e t levels of consumption have

to

b e guaranteed on t h e o n e hand and s a t u r a t i o n levels of consumption, which identify t h e maximum possible levels of consumption, have

to

b e considered on t h e o t h e r hand,

-

production c a p a c i t i e s

are

limited,

-

t h e n e t e x p o r t

to

socialist c o u n t r i e s equals or exceeds a n exogenously given budget.

F r o m various points of view t h i s objective function* is v e r y important:

1. A f e a t u r e of t h e GDR

forest sector

i s t h e high n e t import of

r a w

wood.

sawnwood, panels, p a p e r s and b o a r d s (in physical terms) and t h e high n e t e x p o r t of f u r n i t u r e and o t h e r wood-based end products.

2. The pulp and p a p e r production i s especially e n e r g y intensive and e x c e p t ^- brown coal and g a s all o t h e r e n e r g y s o u r c e s have

to

b e imported.

3. Equipment used

in

wood processing h a s

to

b e imported p a r t l y from capi- talist c o u n t r i e s as w e l l as

f r o m

socialist counties.

4. In foreign t r a d e between COMECON c o u n t r i e s multilateral c l e a r i n g in t r a n s f e r a b l e r u b l e s (TR) i s used. To g u a r a n t e e a n o v e r a l l balance for imports a n d e x p o r t s (in value terms)

f r o m

t h e GDR

to

all o t h e r COMECON countries,

w e

need

to

develop a n exogenous budget specifying minimum n e t e x p o r t s

to

and maximum n e t imports

f r o m

o t h e r COMECON members.

5. The maximization of net e x p o r t

to

c a p i t a l i s t c o u n t r i e s (in h a r d c u r r e n c y ) i s v e r y important because if e x p o r t s e x c e e d imports, h a r d c u r r e n c y i s available and

f r o m

t h e point of view of a c e n t r a l l y planned economy t h i s is a flexible and useful

resource.

The following formulation

can

b e suggested for modeling t h e GDR f o r e s t

sec- tor

in t h e GTM:

m a x C

^[(n*

-

^e,mp

-

^{(njk +} Dfi.k) ej,.k1 f

f o r a l l j a n d k j # r

C,. 2

c;.

⁽³⁾

where

=The product c l a s s i f i c a t i o n f o r paper and boards u s e d i n t h e CTM and t h e CDR module 1s n o t s u i t - a b l e t o r e f l e c t t h a t t h e t o t a l e x p o r t s of p a p e r s and boards h a v e t h e same v a l u e a s t h e t o t a l Im- p o r t s of paper and boards (ArnolWRahn 1981). T h e r e f o r e t h e s o l u t i o n o f model r u n s m u s t be con- s i d e r e d t e n t a t i v e .

r* is t h e index of t h e GDR

r is t h e index of t h e ESC region (including USSR) j is t h e index of o t h e r regions, e x c e p t ESC and USSR k is t h e index of commodity K

S.

I s t h e exogenously given budget of net e x p o r t t o socialist countries

c:*

is t h e v e c t o r of minimum t a r g e t levels of consumption in t h e GDR

v,OOk =

min(C,qk ,KrOk)

ITJk

f o r all j, j f r are t h e import o r e x p o r t p r i c e s in region j endogenously estimated

IT;

are t h e i n t e r n a l

C M E A

p r i c e s exogenously given.

REF'ERENCES

Andersson, A.E., Kallio, M., SeppZilB, R. 1984. Systems Analysis f o r t h e Forest Sector. WP-84-17. Laxenburg, Austria: International Institute f o r Applied Systems Analysis.

Arnold, D., Rahn, K.-D. 1981a. Have W e Expected Further Possibilities

or

Limits in Waste P a p e r Input? (I). Zellstoff und P a p i e r (4).

Arnold. D.. Rahn, K.-D. 1981b. Have W e Expected F u r t h e r Possibilities

or

Limits in Waste P a p e r Input? (11). Zellstoff und P a p i e r (4).

Brautzsch. H.-U., 1984a. P a r t i a l Input-Output-Table f o r Wood. Holztechnologie

.

^(3).

Brautzsch, H.-U., 1984b. Timber in t h e National Reproduction P r o c e s s in t h e GDR.

Dostischenija i Perspektivi (12). Moscow.

Brautzsch, H.-U.. 1984c. The Influence of Wood on Economic Growth. Ph.D.

Thesis. Berlin.

Breithaupt. G.. Stand, H., Storandt. K.. Alexander, H.. 1959. The Influence of Capi- talism on t h e Development of t h e German f o r e s t

sector.

Berlin.

Dobrinsky, R.. Kallio. M. 1984. Modelling Small European Socialist Countries in

a

Global Forest S e c t o r Model. Internal Draft. Laxenburg, Austria. Interna- tional Institute f o r Applied Systems Analysis.

Dykstra. D.P., Kallio, M. 1984. A Preliminary Model of Production, Consumption and International Trade in F o r e s t Products. WP-84-14. Laxenburg, Austria.

International Institute f o r Applied Systems Analysis.

Fedorov, V., Dykstra. D.. Iakimets, V., Kallio, M. 1984. A Soviet Module f o r t h e Global Forest S e c t o r Model. WP-84-101. Laxenburg, Austria. International Institute f o r Applied Systems Analysis.

Grottian, W. 1948. The c r i s i s of German and European timber utilization. Berlin.

Kurth. H., Lucas, G., 1980. Deliberations Concerning t h e Intensification of Organic Production in Forestry. Conference materials, Volume 3, D r e s d e n n h a r a n d t .

Kurth, H., Lucas. G., 1984. Methods of Forecast of F o r e s t Resources. Conference materials, Volume 2, DresdenITharandt.

Langendorf, G., 1981a. Total Utilization of t h e Raw Wood Available-Important Tasks of o u r National Economy. (I). Holzindustrie (4).

Langendorf, G., 1981a. Maximum Utilization of t h e Raw Wood Available--Important Tasks of o u r National Economy. (II). Holzindustrie (4).

Langendorf, G., 1982. Timber--a Raw Material with a Future. Leipzig.

Langendorf, G., 1983. Facilities and

Main

Trends of t h e Complex Utilization of Wood. Holzindustrie (1).

Miiller, H., Wolf, F., 1980. Analysis of some economic f a c t o r s determining t h e long-term s t r a t e g y of waste p a p e r input. Zellstoff and P a p i e r (4). Offner, H., 1961. F o r e s t r y and f o r e s t industry

at

present. Holz-Zentralblatt (123).

Riithnick, R., 1984. On t h e 35th Anniversary of t h e Foundation of t h e German Democratic Republic. Sozialistische Forstwirtschaft (10).

Statistical Yearbook of t h e GDR. Berlin. Various Years.

Statistical Yearbook of Member S t a t e s of t h e Council f o r Mutual