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Global Restoration Initiative Inspiring, enabling and mobilizing action to restore vitality to degraded landscapes and forests around the globe. The GFPM predictions are then discussed in terms of the effect of planted forests on the world prices of specific wood products, and on the quantities consumed, produced, and traded by the main regions of the world.
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The impacts of planted forests on consumer and producer surplus and on harvesting from natural forests are also considered. The theoretical framework underlining the study is illustrated in Figure 1. It describes world demand, supply and trade of a single commodity wood produced in two regions, where Region 1 includes the parts of the world that contain planted forests while Region 2 represents the rest of the world containing no planted forests.
Two scenarios were tested, one where planted forests are utilised and the other where they are not. When planted forests are utilised, the world equilibrium price is P. At that price, Region 1 with planted forests utilised produces the quantity S 1 and consumes the amount D 1.
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In the alternative scenario, the planted forests in Region1 are not utilised so Region 1 would produce less wood at any given price or, equivalently it would cost more to produce a given amount. The equilibrium price would then be P ' and the net exports of Region 1 would be S 1 '- D 1 ' equal to the net imports of Region 2, D 2 '-S 2 '. Thus, the effect of utilising planted forests in Region 1 is equivalent to a shift of the production supply curve from A to B.
This shift lowers the price, which increases consumption in both regions. The utilisation of planted forests in Region 1 also leads to more trade but the effect on production is variable. For example, in Figure 1 : production is higher in Region 1 when planted forests are utilised but the world price is lower. Thus production is slightly lower in Region 2 when planted forests are utilised. This is because the lack of planted forests in Region 2 means the supply curve for this Region is unchanged and thus the lower price induces less production.
Effect of utilisation planted forests on world demand, supply, and trade in wood. P refers to price, S to production, D to consumption. A and B designate the wood supply with and without planted forests, respectively. The total impact of planted forests on the world forest economy was assessed by estimating the change in consumer and producer surplus in various regions, with and without utilisation of planted forests Varian, , pp.
Figure 2 represents the theory for a single closed economy and one product: wood.
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It suggests that while wood consumers always benefit from the utilisation of planted forests, this is not generally the case for wood producers. Consumer and producer surplus without planted forests, and with planted forests. Point A is the equilibrium without utilisation of planted forests, at quantity Q 0 and price P 0.
Point B is the equilibrium with utilisation of planted forests. The area of the triangle DAP 0 is the profit, or producers' surplus, without utilisation of planted forests. The utilisation of planted forests decreases the price of wood to P 1 and increases consumption and production to Q 1. Since the demand curve is unchanged, the price decrease and the quantity increase always increase the consumer surplus by the amount measured by the area P 1 P 0 AB. Thus, the producer surplus on planted forests is always positive, and equal to the area P 1 ED , however the surplus of all wood producers on planted forests or not , measured by the area P 1 BD , may be higher or lower than without planted forests area P 0 AD depending on the elasticity of supply and demand.
This model simulates demand, supply and trading of fourteen groups of commodities in countries. The model computes the market equilibrium for all products in any given year and simulates the evolution of this equilibrium from one year to the next to project the future state of the sector. However, in this application only the static part of the model was used to represent the market equilibrium in with and without utilisation of planted forests.
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Following the method of Samuelson this equilibrium was computed by maximising the sum of the consumer and producer surplus for all products and countries:. The first integral measures the value of the end products to consumers, the second and third integrals the cost of production, and the last term the transport cost. Optimisation was subject to the following demand-supply equilibrium constraint for each country and product:. The left-hand side of the equation represents the sum of imports, domestic supply, and manufactured quantity of a product in a country, while the right-hand side represents the sum of domestic demand for end products, demand for input in the manufacture of other products, and exports to other countries.
The primal solution of this constrained optimisation gives the quantities consumed, produced, and traded, while the dual solution gives the equilibrium price for each product and country. The model was calibrated for the year , following the procedure described by Buongiorno and Zhu b. The GFPM provided results for that closely replicated actual observations for that year. In the GFPM, wood supply curves that include supply from planted forests are approximated by their linear tangent at the equilibrium point:.
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The scenario without utilisation of planted forests was represented by a shift in the supply curve to the left:. There is little international information about the proportion of wood production that comes from planted forests. It is generally recognised that this is substantially higher than the proportion of forest area that they occupy Sheffield , AFB , Carle and Holmgren In this study it was assumed that a Lorenz curve would describe the relationship between the proportion of roundwood production from planted forests in a country and the proportion of forest area occupied see for example Gastwirth, :.
Only results for major world regions are presented here. The last two columns of Table 1 show the consequences of the Lorenz curve assumption for the regional roundwood production from planted forests. Worldwide roundwood production from planted forests computed from these data was estimated to be approximately 1 billion m 3. Of this, Asia contributed million m 3 and Europe including the Russian Federation million m 3. The GFPM was initially run for the scenario with planted forests using data. The model was then run for the scenario without planted forests using the same data after application of a shift in the roundwood supply curves to reduce roundwood production by the amount produced from planted forests.
No other change was made.
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The difference between results with and without utilisation of planted forests gave a measure of the effect of planted forests on the global forest sector. In competitive world markets, price is the most important indicator of the effect of resources and policies on demand, supply, and trade. World prices defined as the average unit value of world exports, as they were with planted forests in and as they would have been without planted forests, were calculated with the GFPM Table 2.
A root cause is that, with current technologies, market prices and disparate stakeholder interests, natural forest uses in Ecuador tend to yield less income than alternative mainly agro-pastoral land uses. The deforestation cycle follows a composite economic rationale, based on wood extraction, agriculture and cattle ranching. Though a slower pace of deforestation seems rational for the Ecuadorean state, on the basis of precautionary considerations, substantial success in curbing forest loss can only be achieved when payments for global forest benefits are combined with effective conservation incentives on the ground.
Authors: Wunder, S. Topic: change,deforestation,economics,forest policy,history,institutions,land use,forest conservation,incentives,theory.