A Dynamic Forest Sector Model with a Swedish Case

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Abstract:

Forest management and new plant investments are long-term decisions. Consequently, strategic planning is vital for the companies involved and has been one of the most important functions of management. In the future this could be even more important. Many forest companies are facing slow market growth along with, cyclical fluctuations in demand, high interest rates and high investment requirements to increase or replace capacity. This paper presents an instrument to aid managers in their strategic planning. A mathematical description of the instrument, a long-term forest sector model, is presented followed by an example of its use in a Swedish case. The model was developed to analyze the impact of cost competitiveness on the structural change of the Swedish forest sector in a 15-25 year perspective. The model is used now by managers in Sweden to produce scenarios for the Swedish forest industry. The output from the model is also used as input for specific enterprise models. The model consists of two symmetric, competing forest sectors--one for the domestic forest sector and one for the competing forest sectors of other countries. Each forest sector covers all activities, ranging from timber growth to the consumption of forest industry products such as paper, sawn wood, and panels. At the end of this paper an application of the model is illustrated by the Swedish forest sector. One conclusion drawn is that since the Swedish forest sector is competing in a world market the development of its profit level compared with competitors is extremely important. Forest Sci. 32:377-397.

Keywords: Policy analysis; competitiveness; simulation; technological development; wood availability

Document Type: Journal Article

Affiliations: Director of Research, Department of Operational Efficiency, Swedish University of Agricultural Sciences, Box 7013, S-750 07, Uppsala, Sweden

Publication date: June 1, 1986

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