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Understanding the Effects of Increased Use of Wood Energy on Timber and Wood Product Markets

Photo of Hardwood logs are sorted into sawlogs (left) and pulpwood (right). The sawlogs were destined for a mill that makes logging mats (far right), and the pulpwood (small diameter and rough and rotten) was hauled to Enviva-Northampton pellet mill in North Carolina.  The smallest and dirtiest material, including logging residues and aboveground stumps, were chipped and sold to Dominion Power in Virginia.?
Hardwood logs are sorted into sawlogs (left) and pulpwood (right). The sawlogs were destined for a mill that makes logging mats (far right), and the pulpwood (small diameter and rough and rotten) was hauled to Enviva-Northampton pellet mill in North Carolina.  The smallest and dirtiest material, including logging residues and aboveground stumps, were chipped and sold to Dominion Power in Virginia.? Snapshot : 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.?

Principal Investigators(s) :
Abt, Karen LeeNepal, Prakash
Prestemon, Jeffrey P.  
Research Location : United States
Research Station : Southern Research Station (SRS)
Year : 2019
Highlight ID : 1574

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, USDA Forest Service scientists at the agency's Southern Research Station 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.

Forest Service Partners

External Partners

  • Kenneth E. Skog - Forest Products Laboratory (retired)
  • North Carolina State University??
  •  ?Oak Ridge National Laboratory