Basic Assumptions

A supporting technical document to the 1989 RPA Assessment

The RPA Assessment provides long-term projections of supply of and demand for natural resources. A variety of economic and demographic variables are critical factors in these projections. To ensure consistency across resources analyses, a set of basic assumptions are developed to be used in all resource analyses. This document describes the basic assumptions for the 1989 RPA Assessment and how they differ from those used in the 1979 RPA Assessment.

Many changes occurred in the U.S. economy between 1979 and 1989. During this decade, trade and budget deficits, interest and inflation rates, and energy costs have influenced short- and long-term prospects for the U.S. economy. Despite the many short-run shocks to the economy, the general outlook is one of growth and increasing affluence of the U.S. population. This outlook parallels the history of the past 50 years, during which the U.S. economy was buffeted by world war, recession, and other dislocations but still managed to more than quadruple its gross national product net of inflation and deflation.

There were four major revisions in the basic assumptions underlying the RPA Assessment - projections of population, gross national product, energy prices, and per capita consumption of red meat. These revisions were based on new information obtained since the basic assumptions developed for the 1979 RPA Assessment.

Population

For the 1979 RPA Assessment, population was projected under three sets of assumptions termed Alow," Amedium," and Ahigh." In most subsequent analyses, the medium projections were given emphasis. For the 1989 RPA Assessment, only one population projection was made. The Bureau of the Census middle series projection with a high immigration assumption was used. The high immigration assumption attempts to account for net illegal immigration. The increased population projections, compared to the 1979 assumptions, reflect primarily the higher immigration assumption.

Gross National Product

The 1979 Assessment had low, medium, and high projections of gross national product. The 1989 projection was lower than the medium projection until 2020, but was about 8% higher by 2030. Per capita disposable income in 2030 was assumed to be $25,840 for the medium projections in the 1979 Assessment, and $23,530 in the 1989 RPA Assessment. Income projections indicate rising affluence of the U.S. population, with real per capita purchasing power more than doubling by 2040.

Energy Costs

No explicit energy cost projections were made for the 1979 RPA Assessment. Projections were made for the 1984 Supplement. Projections for the 1989 Assessment were considerably lower than for the Supplement, partly based on the softness of energy prices in the 1980s. There is much uncertainty about future crude oil prices. For the 1989 assumptions, prices were arbitrarily leveled at $50 per barrel of crude oil (compared to $133 in the Supplement), assuming that at this price, conservation and use of substitute energy sources would become wide-spread.

Beef, Veal, Lamb, and Mutton Consumption

The 1989 RPA Assessment assumed that total per capita consumption of these red meats would remain constant at 110 pounds per capita per year. These projections are considerably lower than those used in the 1979 Assessment, which assumed red meat consumption would be 148 pounds per capita in 2030 (using the medium projection). This change was based on the trend in actual consumption over the past decade, a growing awareness of the importance of diet in personal health, and the price competitiveness of poultry and other substitute foods.

USDA Forest Service. 1989. Basic Assumptions. General Technical Report RM-174. Fort Collins, CO: U.S. Department of Agriculture, Forest Service, Rocky Mountain Forest and Range Experiment Station. 11 p.