Econometric Analysis of global wood markets and its implications on in-ternational forest products modelling
by Christian Morland
Date of Examination:2022-10-27
Date of issue:2023-03-03
Advisor:Prof. Dr. Matthias Dieter
Referee:Prof. Dr. Matthias Dieter
Referee:Prof. Dr. Bernhard Möhring
Referee:Prof. Dr. Martin Banse
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Abstract
English
Global economic systems are changing due to several possible influences, like globalization, climate change, or social transformation. Even though, the wood markets analysis is well established and de-veloped for many kinds of applications economic models remain simplified descriptions of reality and must, therefore, adapt to changing market patterns. This PhD thesis aims to improve forest sector analysis by enhancing economic modelling approaches of international forest products markets. The focus is on implementing actual econometric findings in economic models. To achieve this objective three steps were undertaken in this thesis. First, the existing analysis about supply and demand functions in wood markets were actualized with modern econometric methods as existing literature often concentrate on dependencies in isolated aspects of wood market, while the interactions with other aspects were ignored. To close this gap in research, the way in which the amount of wood supplied, demanded, and traded affects market equilibria was analyzed econometrically in this thesis. In this context, the supply side of a partial economic equilibrium model was extended by differing between roundwood from planted and from natural forests. The modified model shall depict the growing importance of wood from planted forests. After the extension take place, the model was supplemented with the results of the newly established econometric models. This procedure mainly serves to check the plausibility of estimated elasticities. However, the performance of the improved model also serves to validate the extension of the eco-nomic model. One main result of this part is that price and income elasticities in demand behave as predicted by economic theory, while price elasticities of both imports as well as exports are significantly negative. These results can be interpreted in a way that the trade of wood commodities is driven by demand in international markets. Second, until now little attention has been paid to macroeconomic relationships of lignocellulosic products. Hence, economic models often do not account for this sub-sector. To close this gap in research the present thesis implements dissolving pulp, lignocellulosic chemical derivatives, and textile fibres within the context of a partial equilibrium model. In preparation for this, market elasticities were esti-mated by using econometric panel data models. As the next step, a partial economic equilibrium model was extended by a lignocellulose-based sub-sector. This methodological enhancement is, until now, unique and makes it possible to model and analyze the interdependencies that may occur between traditional and emerging forest-based sectors. Eventually, the modified model was used to simulate scenarios about possible transitions from a petrol-based economy to a sustainable bio-based economy. Our findings suggest that, if the world could change toward a sustainable bioeconomy, consumption of roundwood could shift towards more efficient production of wood-based panels or lignocellulose-based materials. However, such developments must be accompanied with technological changes to reduce the total amount of wood input in the final products. This would generate additional resources potentials for new wood-based products. Third, existing econometric literature in bilateral trade flows of wood markets concentrate on the tradi-tional definition of the gravity model of trade. However, these models cannot account for sectoral or product-specific effects and therefore leave a gap in the analysis of wood market trade. To close this gap different structural definitions of gravity was developed in economics. Until now these models were not used in wood market analysis. This dissertation aims to close this gap by introducing a struc-tural framework of gravity to wood markets. The use of such framework will open the possibility to include effects on sectoral or product level and additionally, gives a broad economic background which offers new intersections to future wood market modelling approaches.
Keywords: econometrics; gravity model; global forest product markets; forest sector modelling; market elasticities; bilateral trade