Effects of Increased Demand for Biofuels: A Dynamic Model of the Swedish Forest Sector
AbstractIn this paper, we estimate the dynamic effects on the forest sector of an increased demand for biofuels. This is done by developing a partial adjustment model of the forest sector that enables short, intermediate, and long run price elasticities to be estimated. It is relevant to study the effects of increased demand for biofuels as the Swedish government has committed to an energy policy that is likely to further increase the use of renewable resources in the Swedish energy system. Four subsectors are included in the model: the forest owners, who supply sawtimber, pulpwood and forest fuels; the sawmills which demand sawtimber; the pulp and paper industry which demands pulpwood; and the energy industry which demands forest fuels. The results show that the short run elasticities are fairly consistent with earlier studies and that sluggish adjustment in the capital stock is important in determining the short and intermediate run responses. Simulation shows that an increase in the demand for forest fuels has a positive effect on the equilibrium price of all the three types of wood, and a negative effect on the equilibrium quantities of sawtimber and pulpwood.
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Bibliographic InfoPaper provided by Umeå University, Department of Economics in its series Umeå Economic Studies with number 658.
Length: 22 pages
Date of creation: 28 Apr 2005
Date of revision:
Contact details of provider:
Postal: Department of Economics, Umeå University, S-901 87 Umeå, Sweden
Phone: 090 - 786 61 42
Fax: 090 - 77 23 02
Web page: http://www.econ.umu.se/
More information through EDIRC
Forest economics; Price elasticities; Long run; Energy sector;
Find related papers by JEL classification:
- L73 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Forest Products
- L78 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Government Policy
- Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply
- Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
This paper has been announced in the following NEP Reports:
- NEP-AGR-2005-04-30 (Agricultural Economics)
- NEP-ALL-2005-04-30 (All new papers)
- NEP-ENE-2005-04-30 (Energy Economics)
- NEP-ENV-2005-04-30 (Environmental Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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