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Goal: Deliver Benefits to the Public Understanding the effects of increased use of wood energy on timber and wood products markets

Director’s Choice
Hardwood logs sorted into sawlogs and pulpwood
Hardwood logs are sorted into sawlogs (left) and pulpwood (right). The sawlogs were destined for a mill that makes logging mats, which you can see to the far right. The pulpwood, small diameter and rough and rotten were hauled to the Enviva pellet mill in Northampton, NC. The smallest and dirtiest material, including logging residues and aboveground stumps, were chipped and sold to Dominion Power in Virginia. (Forest Service photo by Karen Abt)

Introduction

The development of new markets for wood products has potentially important impacts on the American public and taxpayers: competition with existing industries could increase or decrease outputs, and potentially increase income to forest landowners, making forests more profitable and thus retained as forestland. This study helps better understand such impacts on wood products markets and the use and management of forest resources.

Summary

An expansion in future consumption of wood energy could affect wood products markets. Less is understood about the competition between wood for energy and traditional products. The effects on final and byproduct production and prices are also unclear. To better understand such effects, SRS scientists projected market prices and quantities of timber, lumber, wood energy, and paper produced and consumed. The projections included a baseline scenario, where wood energy use increases at the historic rate, and a high use scenario, where wood energy almost doubles by 2050.

The model results show that increased wood use for energy will impact traditional forest products industries, such as pulp and paper, because increased demand for wood for energy leads to higher prices for timber, which will reduce profits and production quantity of other industries. At the same time, increased timber demand leads to higher revenues for timber landowners. Another interesting result is that increased demand for mill residues and small diameter timber leads to increased production of sawtimber and lumber.

Future expansion in wood energy use could bring notable increases in regional timber harvests, timber prices, timberland area, and timber inventory. Increased consumption of pulpwood for energy could lead to higher prices. However, increasing pulpwood consumption for energy led to increased lumber production and gains in the net exports of lumber.

By increasing associated future forest rents, wood energy-induced increases in timber prices could help prevent forest conversion to other land uses, as higher timber prices could incentivize landowners to invest in new plantations or intensified management activities.

Principal Investigator
Karen Lee Abt, Research Economist
RWU
4804 - Forest Economics and Policy
Strategic Program Area
Resource Management and Use
Publication
Projected Market Competition for Wood Biomass between Traditional Products and Energy: A Simulated Interaction of US Regional, National, and Global Forest Product Markets
CompassLive Article
Future Increases in Biomass Demand Could Affect Wood Economy
Research Partners
Kenneth E. Skog (FS retired)
Jeff Prestemon (SRS)
External Partners
Prakash Nepal (NCSU)
Robert C. Abt (NCSU)