Modelling the Implications of Illegal Logging for the New Zealand Forest Sector James Turner, Andres Katz and Joseph Buongiorno

Transcription

1 Modelling the Implications of Illegal Logging for the New Zealand Forest Sector James Turner, Andres Katz and Joseph Buongiorno

2 Objective Determine the effect of international trade distortions due to illegal logging on the price and competitiveness of New Zealand wood products in domestic and foreign markets

3 Overview Study Methodology Study Findings Conclusions

4 Study Methodology

5 Study Methodology: Modelling Repercussions for New Zealand of illegal logging in an international context Magnitude of illegal logging is uncertain Secondary processed wood products in illegal trade

6 Study Methodology Global Forest Products Model International impacts Reduction in wood supply due to elimination of illegal logging Incorporate secondary processed wood products Radiata Pine Market Model New Zealand implications of impacts from GFPM Exogenous price changes in key markets and competitors

7 Global Forest Products Model Forecasts Prices Demand Supply Trade Competitive equilibrium 18 wood products 180 countries linked by trade

8 Magnitude of Illegal Logging Base scenario with illegal logging Most likely level of illegal logging High and Low levels Country/ Region Low Most Likely High Africa WC Brazil Other Latin America China Indonesia Malaysia Other Asia Acceding EU Russia

9 Softwood logs

10 Wooden furniture

11 Secondary processed wood products Carpentry, mouldings, furniture, prefab buildings Limited production and consumption data Export supply Import demand Incorporated into existing GFPM structure t Objective function: subject to: j j T T jiq jik max Z = ik Pik ( Dik ) ddik Yikmik ( Yik ) i k D 0 + Yiq Diq a iqk Yik T + Yik Dik T k j ijk = 0 j i ijq k = 0 i j k c ijk T ijk Inputs material balance SPWP material balance

12 Secondary processed wood products Import demand econometric equations Price Wealth (GDP) Econometric estimation with panel data Mouldings Carpentry Furniture Prefab buildings Price GDP Export supply represented using activity analysis Input-output coefficients Manufacturing cost

13 Secondary processed wood products Raw material Intermediate product Final product Fuelwood Fuelwood Other wood Industrial wood Sawnwood Other wood Sawnwood Exports Carpentry Plywood Plywood Mouldings Particleboard Particleboard Furniture Fiberboardb Mechanical pulp Fiberboardb Newsprint Prefab buildings Chemical pulp Printing paper Other fibre pulp Other paper Waste paper

14 Radiata Pine Market Model RPMM solves for Log prices Export Pruned, unpruned Quantity of logs to each New Zealand market Domestic Korea, Japan, China, Taiwan, India, Middle East Quantity of lumber to each New Zealand market Domestic Australia structural United States appearance Lumber revenue

15 Radiata Pine Market Model Exogenous world forest product price changes from GFPM Japan USA Canadian log price United States log price Domestic sawnwood price Domestic carpentry price Domestic mouldings price China Russian log price

16 Study Findings

17 Impact of Eliminating Illegal Logging Global wood supply 1.5% lower Average log price 3.8% higher World production and trade changes in 2020 Industrial roundwood Sawnwood Wood panels Pulp & paper Trade Production Secondary processed Change in volume (million m 3 or t)

18 Impact of Eliminating Illegal Logging Production shifts from illegal to legal Dampening effect of price increase Some competitive advantage remains China production and trade changes in 2020 Indonesia production and trade changes in 2020 Industrial roundwood Sawnwood Wood panels Export Import Production Export Import Production Pulp & paper Secondary processed Change in volume (million m 3 or t) Change in volume (million m 3 or t)

19 Impact of Eliminating Illegal Logging Effect on New Zealand s competitors Higher log exports by Australia, USA, Chile Higher sawnwood exports from North America Higher wood panel exports from Europe USA production and trade changes in 2020 Canada production and trade changes in 2020 Industrial roundwood Sawnwood Wood panels Export Import Production Change in volume (million m 3 or t) Export Import Production Change in volume (million m 3 or t) Pulp & paper Secondary processed

20 Impact of Eliminating Illegal Logging Effect on New Zealand Higher log prices Domestic 1.3% higher Export 10.6% higher Harvests 0.6% higherh Log exports 1.0% higher Less impact on processed products Export Import Production Industrial roundwood Sawnwood Wood panels Pulp & paper Secondary processed Change in volume (million m 3 or t)

21 Impact of Illegal Logging on New Zealand Most likely illegal logging Revenue US$178 million/ yr Forest owners US$ 27 million/ yr Similar impact to global tariff elimination Low and High illegal logging Revenue US$167 million to US$385 million/ yr Forest owner revenue US$18 million to US$30 million/ yr

22 Conclusions Modelling approach considered Repercussions for New Zealand in an international context Magnitude of illegal logging is uncertain Secondary processed wood products in illegal trade Main benefit is in New Zealand s export markets Log exporters benefit most Revenue increase US$167 million/ yr to US$385 million/ yr Similar to benefit of global tariff elimination

23 Acknowledgements New Zealand Ministry of Agriculture and Forestry Foundation for Research, Science & Technology New Zealand Institute of Forestry Study reviewers Alison Watson Frances Maplesden Bruce Manley John Eyre

24 Questions?