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Recycling and Long-Range Timber Outlook: Background Research Report 1993 RPA Assessment Update USDA Forest Service

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Recycling and Long-Range Timber Outlook: Background Research Report 1993 RPA Assessment Update USDA Forest Service United States Department of Agriculture Recycling and Forest Service Forest Long-Range Products Laboratory Research Timber Outlook Paper FPL–RP–534 Background Research Report 1993 RPA Assessment Update USDA Forest Service Peter J. Ince Abstract However, contrary to earlier findings based on the 1989 RPA Assessment, results indicate that the United States still faces serious timber supply problems for softwood sawtimber This research report presents an economic analysis of the despite projected increases in recycling rates. National Forest U.S. and Canadian pulp and paper sector, and addresses the timber harvest levels are projected to decline to levels much issue of paper recycling and its projected impact on the long- lower than those predicted in the 1989 Assessment. Other range timber outlook. The report describes the structure, adjustments since the 1989 Assessment include higher data, and assumptions of a comprehensive economic model demand for softwood lumber and plywood in the United developed to simulate competitive future evolution of States, lower Canadian lumber production, lower private technology and markets for all products and fiber inputs of industrial sawtimber harvests in the U.S. West, increased the U.S. and Canadian pulp and paper sector. The model was imports of softwood lumber, and reduced softwood log linked by iterative solution to the USDA Forest Service exports from the Pacific Northwest. The net economic TAMM/ATLAS model, which encompasses the lumber and impact of the adjustments is that softwood sawtimber prices plywood sectors, timber stumpage markets, and timber in the United States are projected to increase substantially in growth and inventory. Thus, results are based on a compre- the future. Consequently, earlier conclusions that increased hensive economic assessment of future trends in paper recycling could stabilize softwood sawtimber prices are no recycling and future impacts on timber markets throughout longer warranted. the forest and forest product sectors of the United States. Projections extend five decades into the future, to the year The NAPAP Model data and projections presented in this 2040. The results lead to the conclusion that rapid increases report were derived from the 3/5/93 NAPAP Model data set, will occur in U.S. paper recycling rates in the 1990s, with exogenous timber supply projections from TAMM/ followed by more gradual increases in subsequent decades. ATLAS run LR123. The TAMM/ATLAS projections Increased recycling will expand fiber supply and extend presented in this report were obtained from the draft TAMM/ timber resources in the United States. Pulpwood prices are ATLAS run for the 1993 RPA Update, which incorporated projected to remain relatively stable in the decades ahead, pulpwood projections from the NAPAP Model run dated while pulp, paper, and paperboard production in the United March 5, 1993. States is projected to increase substantially. The U.S. balance of trade in pulp, paper, and paperboard commodities is projected to swing strongly in favor of U.S. exports. Keywords: RPA, NAPAP, economics, paper October 1994 Ince, Peter J. 1994. Recycling and long-range timber outlook: background research report 1993 RPA Assessment update USDA Forest Service. Res. Pap. FPL–RP–534. Madison, WI: U.S. Department of Agriculture, Forest Service, Forest Products Laboratory. 110 p. A limited number of free copies of this publication are available to the public from the Forest Products Laboratory, One Gifford Pinchot Drive, Madison, WI 53705–2398. Laboratory publications are sent to more than 1,000 libraries in the United States and elsewhere. The Forest Products Laboratory is maintained in cooperation with the University of Wisconsin. The United States Department of Agriculture (USDA) Forest Service is a diverse organization committed to equal opportunity in employment and program delivery. USDA prohibits discrimination on the basis of race, color, national origin, sex, religion, age, disability, political affiliation, and familial status. Persons believing they have been discriminated against should contact the Secretary, U.S. Department of Agriculture, Washington, DC 20250, or call (202) 720–7327 (voice), or (202) 720–1127 (TTY). 115 Acknowledgments Disclaimer The author gratefully acknowledges coauthors of the North Projections shown in this report are the result of long-range American Pulp And Paper Model (NAPAP Model) and other economic modeling based on supply and demand theory. contributors, including Dr. Dali Zhang, postdoctoral research The projections are intended only to provide a professional associate, Department of Foresty, University of Wisconsin– opinion about directional trends of the future. The Madison (UW); Romain Jacques, Economist, Forestry projections should not be viewed as official endorsement of Canada, Policy and Economics Directorate (PED), Ottawa; specific outcomes or events, and they do not represent and Professor Joseph Buongiorno, Department of Forestry, outcomes that are certain to occur in the future. Ongoing UW. This report would not have been possible without changes in markets and technology will certainly render development of the NAPAP Model and the work of many these projections obsolete, and reasonable variation in data contributors. Dali Zhang and Joseph Buongiorno were and assumptions can lead to a wide range of projected future chiefly responsible for programming and testing the latest outcomes apart from the projections shown in this report. version of the price-endogenous linear programming system The data and projections are presented here solely for the (PELPS III), which was the general modeling system used in purpose of explaining the assumptions and detailed analysis the NAPAP Model. The following persons also contributed of paper recycling and long-range timber outlook that was substantially to development of the model: Don G. Roberts developed for the Forest Service 1993 RPA Assessment (formerly with PED), who together with the author initiated Update. research that led to development of the NAPAP Model data base; Susan Phelps, computer programmer with PED, developed a system for tabulating NAPAP Model input data and output information; Irene Durbak, Research Forester, USDA Forest Service, Forest Products Laboratory (FPL), obtained U.S. trade data and developed estimates of U.S. import trade functions; Dr. Hsien-Chi Lu (formerly a graduate student at UW–Madison), who developed econo- metric estimates of U.S. demand functions; Ken Skog, Jill Bickelhaupt, and James Howard, FPL, who assisted in estimating the U.S. recovered paper supply functions; Professor Darius Adams, University of Montana (formerly at University of Washington), and Richard Haynes, USDA Forest Service, Pacific Northwest Experiment Station, Portland, Oregon, who assisted in estimating the U.S. pulpwood supply functions for the NAPAP Model and made iterative runs with the TAMM/ATLAS model; H. Fred Kaiser and David Darr, USDA Forest Service RPA Assess- ment staff in Washington DC, William J. Lange, FPL, and Doug Ketchison and Dave Boulter, PED, who helped provide arrangements and funding that facilitated the international research effort leading to development of the NAPAP Model; former graduate students at the UW– Madison, J. Keith Gilless (now Professor at the University of California–Berkely), who developed the original version of PELPS), and Patrice Calmels, who helped develop the original microcomputer version of PELPS II. Others who helped in compiling data, developing estimates, or providing other contributions to the NAPAP Model included graduate student Togu Manurung, the UW–Madison; Joanne Alig, Mary Reuter, Dena Luze, Denise Ingram, Dietrich Earnhardt, Catherine Ausloos, Ted King, and John Hagerty, FPL; Barbara Baker, Robert G. Prins, and Harry Jaaskelainen, PED; and Stig Anderson, Forestry Canada, Sault Ste. Marie, Ontario. Special thanks are given to Lloyd Davidson of FPL who not only compiled U.S. trade data and other information for the NAPAP Model, but also helped prepare all the charts showing NAPAP Model projections in this report. 116 Contents Page Emergence of the Issue ................................................ 1 Landfill Crisis and Solid Waste Management Dilemma ....................................... 1 Relevance to RPA Assessment ............................... 5 Questions Addressed in This Report ...................... 7 Previous Studies...................................................... 7 RPA Assessment Studies ............................................. 8 Definition of Issue .................................................. 9 Objectives of 1993 Update ..................................... 10 Methods and Approach ........................................... 10 NAPAP Model............................................................. 11 Development of NAPAP Model ............................. 12 Previous Pulp and Paper Sector Models ................. 14 Methodology of NAPAP Model ............................. 15 Long-range Projections by NAPAP Model ............ 17 NAPAP Model Structure and Data Base ................ 18 Regional Structure ............................................. 18 Product Categories, Processes, and Base-year Capacity ......................................... 19 Process Data ....................................................... 19 Pulpwood Supply ............................................... 46 Linkage to TAMM/ATLAS Model ................... 48 Recovered Paper Supply ...................................
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