Dependencies between forest products sectors: A partial equilibrium analysis

An applied partial equilibrium model of the forest cluster has been developed and implemented to assess the impact ofchanging market conditions for the sawmill industry. The focus of this study was to analyze the sawmill industry and the interdependencies between the different sectors in the forest cluster. The dependencies and relationships between the sectors using forest-based raw materials implies that changing market conditions in one sector could have profound effects on other sectors. The analysis indicated that both production and consumption patterns are sensitive to changes in the demand for sawn wood products. There are also significant differences between different intermediate inputs and between different sectors in their responses to these changes. Also, certain sectors and inputs would gain market share while others would lose market shares. Furthermore, changing output market conditions for the sawmill industry have significant effects on the factor prices and on the flow of intermediate inputs between the forest cluster sectors. In general, the price for sawlogs is reduced by between 9 and 25 percent depending on scenario. Even a small reduction in the demand for sawn wood products has serious effects on the price formation and on the quantitative flows in the cluster.Validerad; 2007; 20071008 (roblund)