IDEAS home Printed from https://ideas.repec.org/a/eee/appene/v247y2019icp171-181.html
   My bibliography  Save this article

Bioenergy production to improve value-creation potential of strategic forest management plans in mixed-wood forests of Eastern Canada

Author

Listed:
  • Cantegril, Pierre
  • Paradis, Gregory
  • LeBel, Luc
  • Raulier, Frédéric

Abstract

The relationship between forest management and biomass sourcing is fundamental to the achievement of sustainable bioenergy production. Few biomass-sourcing studies have directly addressed the complex interactions between sustainable forest management and additional demand created by bioenergy production. The first objective of this research was to provide a method for estimating profits for a value chain that harvests volumes scheduled in a sustainable forest management plan. The second objective was to measure the financial and sustainable benefits generated by integrating bioenergy production into this value chain. Using data from a large management unit, a forest management plan was developed to generate an annual flow of timber that can be produced sustainably. We then proposed a network flow optimization model that links the optimal solution of a long-term wood supply optimization model with the processing capacity of an industrial network. Results revealed that the weak demand for lower-quality trees could be a serious impediment to achieving full value-creation potential. Simulations of the implementation of a hardwood pellet mill improved the value-creation potential for hardwood pulp (direct effect) and also for other wood products by providing access to otherwise unprofitable mixed-wood forest strata (synergistic effect). Our experiment showed that integrating a lower-quality timber user, such as a bioenergy production unit, could lead to higher financial profits (up to three-fold), and improve alignment between the sustainable forest management objectives and the industrial network capacity (harvested scheduled area increased from 79% to 98%). Implementing a bioenergy mill also grants a higher return on capital employed compared to historical values for the manufacturing sector. Strengthening the link between strategic planning and industrial processing capacity provides new insights into the impact on value-creation of bioenergy production from forest biomass.

Suggested Citation

  • Cantegril, Pierre & Paradis, Gregory & LeBel, Luc & Raulier, Frédéric, 2019. "Bioenergy production to improve value-creation potential of strategic forest management plans in mixed-wood forests of Eastern Canada," Applied Energy, Elsevier, vol. 247(C), pages 171-181.
    • Handle: RePEc:eee:appene:v:247:y:2019:i:c:p:171-181
    DOI: 10.1016/j.apenergy.2019.04.022
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0306261919306543
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.apenergy.2019.04.022?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Schwarzbauer, Peter & Weinfurter, Stefan & Stern, Tobias & Koch, Sebastian, 2013. "Economic crises: Impacts on the forest-based sector and wood-based energy use in Austria," Forest Policy and Economics, Elsevier, vol. 27(C), pages 13-22.
    2. Rossana, Robert J & Seater, John J, 1995. "Temporal Aggregation and Economic Time Series," Journal of Business & Economic Statistics, American Statistical Association, vol. 13(4), pages 441-451, October.
    3. Bessembinder, Hendrik, et al, 1995. "Mean Reversion in Equilibrium Asset Prices: Evidence from the Futures Term Structure," Journal of Finance, American Finance Association, vol. 50(1), pages 361-375, March.
    4. Chen, Shan & Insley, Margaret, 2012. "Regime switching in stochastic models of commodity prices: An application to an optimal tree harvesting problem," Journal of Economic Dynamics and Control, Elsevier, vol. 36(2), pages 201-219.
    5. Barrette, Julie & Thiffault, Evelyne & Achim, Alexis & Junginger, Martin & Pothier, David & De Grandpré, Louis, 2017. "A financial analysis of the potential of dead trees from the boreal forest of eastern Canada to serve as feedstock for wood pellet export," Applied Energy, Elsevier, vol. 198(C), pages 410-425.
    6. Cambero, Claudia & Sowlati, Taraneh, 2014. "Assessment and optimization of forest biomass supply chains from economic, social and environmental perspectives – A review of literature," Renewable and Sustainable Energy Reviews, Elsevier, vol. 36(C), pages 62-73.
    7. Bouchard, M. & D’Amours, S. & Rönnqvist, M. & Azouzi, R. & Gunn, E., 2017. "Integrated optimization of strategic and tactical planning decisions in forestry," European Journal of Operational Research, Elsevier, vol. 259(3), pages 1132-1143.
    8. Margaret Insley & Kimberly Rollins, 2005. "On Solving the Multirotational Timber Harvesting Problem with Stochastic Prices: A Linear Complementarity Formulation," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(3), pages 735-755.
    9. Andrés Weintraub & Carlos Romero, 2006. "Operations Research Models and the Management of Agricultural and Forestry Resources: A Review and Comparison," Interfaces, INFORMS, vol. 36(5), pages 446-457, October.
    10. Avinash K. Dixit & Robert S. Pindyck, 1994. "Investment under Uncertainty," Economics Books, Princeton University Press, edition 1, number 5474.
    11. Boukherroub, Tasseda & LeBel, Luc & Lemieux, Sébastien, 2017. "An integrated wood pellet supply chain development: Selecting among feedstock sources and a range of operating scales," Applied Energy, Elsevier, vol. 198(C), pages 385-400.
    12. Boukherroub, Tasseda & LeBel, Luc & Ruiz, Angel, 2017. "A framework for sustainable forest resource allocation: A Canadian case study," Omega, Elsevier, vol. 66(PB), pages 224-235.
    13. Shabani, Nazanin & Sowlati, Taraneh & Ouhimmou, Mustapha & Rönnqvist, Mikael, 2014. "Tactical supply chain planning for a forest biomass power plant under supply uncertainty," Energy, Elsevier, vol. 78(C), pages 346-355.
    14. Insley, Margaret & Lei, Manle, 2007. "Hedges and Trees: Incorporating Fire Risk into Optimal Decisions in Forestry Using a No-Arbitrage Approach," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 32(3), pages 1-23, December.
    15. Darius M. Adams & Clark S. Binkley & Peter A. Cardellichio, 1991. "Is the Level of National Forest Timber Harvest Sensitive to Price?," Land Economics, University of Wisconsin Press, vol. 67(1), pages 74-84.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Baburam Rijal & Luc LeBel & Shuva H. Gautam & Pierre Cantegril, 2020. "A Sequential Optimization Approach in Tactical Planning for Value Creation in the Forest Products Industry," Sustainability, MDPI, vol. 12(12), pages 1-23, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Chen, Shan & Insley, Margaret, 2012. "Regime switching in stochastic models of commodity prices: An application to an optimal tree harvesting problem," Journal of Economic Dynamics and Control, Elsevier, vol. 36(2), pages 201-219.
    2. Insley, Margaret, 2017. "Resource extraction with a carbon tax and regime switching prices: Exercising your options," Energy Economics, Elsevier, vol. 67(C), pages 1-16.
    3. Insley, M.C. & Wirjanto, T.S., 2010. "Contrasting two approaches in real options valuation: Contingent claims versus dynamic programming," Journal of Forest Economics, Elsevier, vol. 16(2), pages 157-176, April.
    4. Margaret Insley, 2013. "On the timing of non-renewable resource extraction with regime switching prices: an optimal stochastic control approach," Working Papers 1302, University of Waterloo, Department of Economics, revised Aug 2013.
    5. C. E. Dangerfield & A. E. Whalley & N. Hanley & C. A. Gilligan, 2018. "What a Difference a Stochastic Process Makes: Epidemiological-Based Real Options Models of Optimal Treatment of Disease," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 70(3), pages 691-711, July.
    6. Santos, Andreia & Carvalho, Ana & Barbosa-Póvoa, Ana Paula & Marques, Alexandra & Amorim, Pedro, 2019. "Assessment and optimization of sustainable forest wood supply chains – A systematic literature review," Forest Policy and Economics, Elsevier, vol. 105(C), pages 112-135.
    7. Richter, Martin & Sørensen, Carsten, 2002. "Stochastic Volatility and Seasonality in Commodity Futures and Options: The Case of Soybeans," Working Papers 2002-4, Copenhagen Business School, Department of Finance.
    8. Work, J. & Qiu, F. & Luckert, M.K., 2016. "Examining hardwood pulp and ethanol prices for improved poplar plantations in Canada," Forest Policy and Economics, Elsevier, vol. 70(C), pages 9-15.
    9. Bouasker, O. & Letifi, N. & Prigent, J.-L., 2016. "Optimal funding and hiring/firing policies with mean reverting demand," Economic Modelling, Elsevier, vol. 58(C), pages 569-579.
    10. Delbridge, Timothy A. & King, Robert P., 2016. "Transitioning to Organic Crop Production: A Dynamic Programming Approach," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 41(3), pages 1-18, September.
    11. Murray Carlson & Zeigham Khokher & Sheridan Titman, 2007. "Equilibrium Exhaustible Resource Price Dynamics," Journal of Finance, American Finance Association, vol. 62(4), pages 1663-1703, August.
    12. Baburam Rijal & Luc LeBel & Shuva H. Gautam & Pierre Cantegril, 2020. "A Sequential Optimization Approach in Tactical Planning for Value Creation in the Forest Products Industry," Sustainability, MDPI, vol. 12(12), pages 1-23, June.
    13. Frank Riedel & Xia Su, 2011. "On irreversible investment," Finance and Stochastics, Springer, vol. 15(4), pages 607-633, December.
    14. Shafiee, Shahriar & Topal, Erkan, 2010. "A long-term view of worldwide fossil fuel prices," Applied Energy, Elsevier, vol. 87(3), pages 988-1000, March.
    15. Glover, Kristoffer J. & Hambusch, Gerhard, 2016. "Leveraged investments and agency conflicts when cash flows are mean reverting," Journal of Economic Dynamics and Control, Elsevier, vol. 67(C), pages 1-21.
    16. Tatiana M. Pinho & João Paulo Coelho & Germano Veiga & A. Paulo Moreira & José Boaventura-Cunha, 2017. "A Multilayer Model Predictive Control Methodology Applied to a Biomass Supply Chain Operational Level," Complexity, Hindawi, vol. 2017, pages 1-10, July.
    17. Wu, Feng & Guan, Zhengfei & Yu, Fan & Myers, Robert J., 2013. "The spillover effects of biofuel policy on participation in the conservation reserve program," Journal of Economic Dynamics and Control, Elsevier, vol. 37(9), pages 1755-1770.
    18. Tan, Qinliang & Wang, Tingran & Zhang, Yimei & Miao, Xinyan & Zhu, Jun, 2017. "Nonlinear multi-objective optimization model for a biomass direct-fired power generation supply chain using a case study in China," Energy, Elsevier, vol. 139(C), pages 1066-1079.
    19. Fan, Ying & Zhu, Lei, 2010. "A real options based model and its application to China's overseas oil investment decisions," Energy Economics, Elsevier, vol. 32(3), pages 627-637, May.
    20. Adriana Piazza & Bernardo Pagnoncelli, 2015. "The stochastic Mitra–Wan forestry model: risk neutral and risk averse cases," Journal of Economics, Springer, vol. 115(2), pages 175-194, June.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:appene:v:247:y:2019:i:c:p:171-181. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/405891/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.