The journal news feed presents the editors’ condensed summaries of key findings from selected scientific papers from SNS’ scientific journal Scandinavian Journal of Forest Research.
Journal news feed from Scandinavian Journal of Forest Research (SJFR) Volume 30, shop Issue 1, hospital 2015 reviews four new interesting research articles from the special issue “Forest sector modelling”.
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Cultural distance a barrier to business in China
Foreign investments in the Chinese forest sector have increased rapidly, from 130 million USD in 2002 to 550 million in 2010. This modelling study analysed 109 investment projects to identify the factors that determine the success of different modes of investment. The study found that when a forest company is less familiar with the Chinese market and culture, they prefer to cooperate with a local partner instead of establishing a wholly owned subsidiary. The greater the cultural distance between the corporate host country and China, the more wholly owned affiliates are disfavoured.
What happens in China and the USA affects the world forest market
China is now a major player in the global production and trade of forest products. The country’s share of coniferous and non-coniferous sawn wood consumption in 2011 was 10% and 25%, respectively, with the annual increase still strong. It is evident that changes in China will affect the global market. This study presents a global trade model with two scenarios: one involving a recovery in the US market for forest products, and one for a projected decline in the Chinese domestic market. If the USA recovers, China will face higher prices for logs and sawn wood. A decline in China would have a subsequent impact, although small, on the global solid wood market.
Basic assumptions impact model outputs
Norway currently has two forest sector models that differ in their basic modelling assumptions. These assumptions may have important impacts on the model results. One model (NTM) assumes that consumers and producers are “near-sighted” in the sense that they react to the current market conditions. The other model (NorFor) assumes that the actors have perfect information over the model’s time horizon, and are able to plan for the long-term. The authors discuss the principal differences between the models. A parallel case study shows that both models are sensitive to changes in assumptions and data. Both have strengths and weaknesses, and the authors suggest that each model’s appropriateness to respond to the study question should be considered when choosing a modelling approach.
Forest sector models must consider technical changes
Technical changes have effects on the revenue and use of wood for forest products. Future technical changes imply uncertainty in forest economy modelling, but they still need to be considered. In this study, future prices, wood consumption and production, and carbon sequestration were forecast based on low or high levels of technical change. Examples of technical changes are better waste paper utilisation, new techniques that reduce manufacturing costs, and forest management that increases the growing stock. This paper discusses how technical changes can be translated into modelling assumptions.