The Global Forest Trade Model GFTM. Jonsson, R., Rinaldi, F., & San-Miguel-Ayanz, J. Volume 27360 of EUR - Scientific and Technical Research, Publications Office of the European Union.
The Global Forest Trade Model GFTM [link]Paper  doi  abstract   bibtex   
A meaningful assessment of policy options within the forest-based bioeconomy presupposes the capability to model market implications. To this end, an economic forest-based sector model, the Global Forest Trade Model (GFTM), is being developed at the Forest Resources and Climate unit of the Institute for Environment and Sustainability (IES). The GFTM is an equilibrium trade-based model for the forest sector with the aim of providing projections of production and trade of wood-based products and pellets for 48 countries/sub-regions of the world, with a focus on EU. This technical report describes the set-up of the model.The study outlines the theoretical framework, the programming of the model in MatLab, data collection, parameters used, and the calibration of the model. Presented test runs with GFTM indicates that the model behaves in a logically consistent way, all in all well in line what can be expected from economic theory. The next steps in the development process entail trying out linkages with a forest resource model and a dedicated energy model. [Excerpt: Summary and conclusions] The importance of the forest-based sector in the Bioeconomy of the EU calls for the use of forest-based sector models, integrating dynamics of forest resources, timber markets, forest-based industry processes, and forest-based product market demand. As part of the integrated modelling framework for the Bioeconomy, the IES has developed the Global Forest Sector Model (GFTM) presented in this report. In order to be suitable for forest policy analysis, a forest sector model should ideally meet on the one hand the necessity to be as disaggregated as possible both in terms of geographical scope and products covered, and, on the other hand, the necessity to maintain a certain degree of aggregation in order to limit numerical problems. [\n] Runs with GFTM, presented in this report, indicate that the model behaves well in line with what can be expected from economic theory and established knowledge regarding forest-based industry processes. Therefore, GFTM seems to have struck a reasonable balance between the objectives of disaggregation and computability respectively. It is true though, that, as other current forest-based sector models, GFTM does not, with the exception of wood pellets, deal with ” new/emerging products”, an obvious shortcoming. However, as there are very limited information as to demand functions, production techniques ( ” conversion factors”), and limited data as to production and trade for these products, they have yet to be dealt with in mainly a qualitative sense. [\n] As the forest-based sector is highly globalized, GFTM focus on tradable products. In some cases, representation of bilateral trade flows might also turn out to be useful. This will certainly be a topic for future research. Finally, a valid model for the forest sector should represent the production process in a sufficiently accurate way to allow the traceability of the impact of policy from primary resources availability, through the industrial transformation process, and finally to consumption and trade. The industry module of the GFTM has been precisely constructed to this aim. [\n] For what concerns the results presented in this reports, somewhat surprising is the (albeit modest) decrease in projected wood pellets consumption of EU countries. As pointed out earlier, this gives a clear indication that wood pellets consumption to a large extent is contingent upon other factors than pure economic drivers. In general, the results, as regards wood pellets projections, should be interpreted with a certain degree of caution, since the GFTM is not dealing with the energy sector. Thus, only the competition between pellets and other wood-based products is regarded as relevant for reaching the market equilibrium. [\n] However, this issue will be resolved soon as the GFTM is planned to ingest demand for wood pellets exogenously, from a dedicated energy-model (see suggested modelling set up in Figure 22 below). Results of the test of arbitrarily fixing the wood pellets consumption levels for respective projected period indicate that GFTM behaves in a logically consistent way, thus allowing, e.g., the assessment of the effects of an increased demand for wood pellets in terms of the production (and consequently also consumption) of other wood-based commodities. [\n] The GFTM model will soon become part of the integrated Bioeconomy modelling framework of the JRC. Indeed, besides the obvious link with the forest resource models used by JRC – the Carbon Budget Model (CBM) and the European Forestry Dynamics Model (EFDM) – the GFTM could also work in cooperation with dedicated energy models. Doing so, GFTM is well-poised for assessing competition as well as synergies between material and energy uses of woody biomass. Next steps in the modelling development will entail testing these linkages.
@book{jonssonGlobalForestTrade2015,
  title = {The {{Global Forest Trade Model GFTM}}},
  author = {Jonsson, Ragnar and Rinaldi, Francesca and San-Miguel-Ayanz, Jesús},
  date = {2015},
  volume = {27360},
  publisher = {{Publications Office of the European Union}},
  issn = {1831-9424},
  doi = {10.2788/666206},
  url = {http://mfkp.org/INRMM/article/13693288},
  abstract = {A meaningful assessment of policy options within the forest-based bioeconomy presupposes the capability to model market implications. To this end, an economic forest-based sector model, the Global Forest Trade Model (GFTM), is being developed at the Forest Resources and Climate unit of the Institute for Environment and Sustainability (IES). The GFTM is an equilibrium trade-based model for the forest sector with the aim of providing projections of production and trade of wood-based products and pellets for 48 countries/sub-regions of the world, with a focus on EU. This technical report describes the set-up of the model.The study outlines the theoretical framework, the programming of the model in MatLab, data collection, parameters used, and the calibration of the model. Presented test runs with GFTM indicates that the model behaves in a logically consistent way, all in all well in line what can be expected from economic theory. The next steps in the development process entail trying out linkages with a forest resource model and a dedicated energy model.

[Excerpt: Summary and conclusions] The importance of the forest-based sector in the Bioeconomy of the EU calls for the use of forest-based sector models, integrating dynamics of forest resources, timber markets, forest-based industry processes, and forest-based product market demand. As part of the integrated modelling framework for the Bioeconomy, the IES has developed the Global Forest Sector Model (GFTM) presented in this report. In order to be suitable for forest policy analysis, a forest sector model should ideally meet on the one hand the necessity to be as disaggregated as possible both in terms of geographical scope and products covered, and, on the other hand, the necessity to maintain a certain degree of aggregation in order to limit numerical problems.

[\textbackslash n] Runs with GFTM, presented in this report, indicate that the model behaves well in line with what can be expected from economic theory and established knowledge regarding forest-based industry processes. Therefore, GFTM seems to have struck a reasonable balance between the objectives of disaggregation and computability respectively. It is true though, that, as other current forest-based sector models, GFTM does not, with the exception of wood pellets, deal with ” new/emerging products”, an obvious shortcoming. However, as there are very limited information as to demand functions, production techniques ( ” conversion factors”), and limited data as to production and trade for these products, they have yet to be dealt with in mainly a qualitative sense.

[\textbackslash n] As the forest-based sector is highly globalized, GFTM focus on tradable products. In some cases, representation of bilateral trade flows might also turn out to be useful. This will certainly be a topic for future research. Finally, a valid model for the forest sector should represent the production process in a sufficiently accurate way to allow the traceability of the impact of policy from primary resources availability, through the industrial transformation process, and finally to consumption and trade. The industry module of the GFTM has been precisely constructed to this aim.

[\textbackslash n] For what concerns the results presented in this reports, somewhat surprising is the (albeit modest) decrease in projected wood pellets consumption of EU countries. As pointed out earlier, this gives a clear indication that wood pellets consumption to a large extent is contingent upon other factors than pure economic drivers. In general, the results, as regards wood pellets projections, should be interpreted with a certain degree of caution, since the GFTM is not dealing with the energy sector. Thus, only the competition between pellets and other wood-based products is regarded as relevant for reaching the market equilibrium.

[\textbackslash n] However, this issue will be resolved soon as the GFTM is planned to ingest demand for wood pellets exogenously, from a dedicated energy-model (see suggested modelling set up in Figure 22 below). Results of the test of arbitrarily fixing the wood pellets consumption levels for respective projected period indicate that GFTM behaves in a logically consistent way, thus allowing, e.g., the assessment of the effects of an increased demand for wood pellets in terms of the production (and consequently also consumption) of other wood-based commodities.

[\textbackslash n] The GFTM model will soon become part of the integrated Bioeconomy modelling framework of the JRC. Indeed, besides the obvious link with the forest resource models used by JRC -- the Carbon Budget Model (CBM) and the European Forestry Dynamics Model (EFDM) -- the GFTM could also work in cooperation with dedicated energy models. Doing so, GFTM is well-poised for assessing competition as well as synergies between material and energy uses of woody biomass. Next steps in the modelling development will entail testing these linkages.},
  isbn = {978-92-79-50192-0},
  keywords = {*imported-from-citeulike-INRMM,~INRMM-MiD:c-13693288,~to-add-doi-URL,bioeconomy,economic-impacts,europe,featured-publication,forest-resources,global-scale},
  pagetotal = {51},
  series = {{{EUR}} - {{Scientific}} and {{Technical Research}}}
}
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