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Estimating supply and demand elasticities of dissolving pulp, lignocellulose-based chemical derivatives and textile fibres in an emerging forest-based bioeconomy

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  • Schier, Franziska
  • Morland, Christian
  • Dieter, Matthias
  • Weimar, Holger

Abstract

In a growing bioeconomy, traditional forest products markets change and diversify. Fossil-based inputs in the chemical, textile, apparel and downstream industries can be replaced by lignocellulose-based products such as dissolving pulp, cellulose-based chemical derivatives and textile fibres. When looking ahead, these previous niche products are likely to gain in economic importance. So far, little attention has been paid to the characteristics of macroeconomic relations of emerging lignocellulose-based materials on macroeconomic level. Key economic parameters for such materials are not available neither at regional nor at global level. This work aims to contribute to a better understanding of the market behavior of emerging forest products that are not yet covered by forest products market analysis. Therefore, this paper investigates how lignocellulose-based products respond to changes of main economic drivers and compute global market elasticities for dissolving pulp, cellulose-based chemical derivatives and textile fibres. To conduct our evaluation, we first test historical input data for non-constancy in time series due to structural changes using change-point estimator (MOSUM test). We subsequently carry out a global econometric analysis of demand and supply elasticities with income (GDP) and real import and export prices as explanatory variables. By doing so, we deliver key information for the adaptation of forest-product market analysis and modelling to an upcoming bioeconomy. The results show several structural changes especially in price data between 1992 and 2015, thus supporting the use of time series cuts to divide the time line from 1992 to 2015 into three different sub-periods. Elasticities are subsequently estimated for each of the sub-periods. The results from this econometric analysis provide import demand and export supply elasticities of dissolving pulp, cellulose chemical derivatives and cellulose textile fibres. In addition, we present elasticity estimation for the apparent consumption of dissolving pulp. Our findings outline the significant relationship between both export supply and import demand volumes and relative changes in prices and income. Across time periods, elasticities of cellulose-based derivatives and textile fibres do not show a clear trend towards more elastic or inelastic coefficients. However, the price elasticities of dissolving pulp fluctuate strongly from inelastic to highly elastic over time. Elasticity estimates of export supply indicate that it is sensitive to international competitiveness which in turn is governed by international demand. Finally, we statistically show that the estimated price and income elasticities of import demand can be analogously interpreted as the demand elasticity of apparent consumption. This is of great importance for economic equilibrium models, such as GFPM or EFI-GTM, in order to simulate and analyze forest sector developments and scenarios.

Suggested Citation

  • Schier, Franziska & Morland, Christian & Dieter, Matthias & Weimar, Holger, 2021. "Estimating supply and demand elasticities of dissolving pulp, lignocellulose-based chemical derivatives and textile fibres in an emerging forest-based bioeconomy," Forest Policy and Economics, Elsevier, vol. 126(C).
    • Handle: RePEc:eee:forpol:v:126:y:2021:i:c:s1389934121000289
    DOI: 10.1016/j.forpol.2021.102422
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    2. Päivinen, Risto & Kallio, A. Maarit I. & Solberg, Birger & Käär, Liisa, 2022. "EU Forest reference levels: The compatible harvest volumes compiled and assessed in terms of forest sector market development," Forest Policy and Economics, Elsevier, vol. 140(C).
    3. Sandro Sacchelli & Costanza Borghi & Roberto Fratini & Iacopo Bernetti, 2021. "Assessment and Valorization of Non-Wood Forest Products in Europe: A Quantitative Literature Review," Sustainability, MDPI, vol. 13(6), pages 1-16, March.
    4. Lauri, Pekka & Forsell, Nicklas & Di Fulvio, Fulvio & Snäll, Tord & Havlik, Petr, 2021. "Material substitution between coniferous, non-coniferous and recycled biomass – Impacts on forest industry raw material use and regional competitiveness," Forest Policy and Economics, Elsevier, vol. 132(C).
    5. Mariana Hassegawa & Jo Van Brusselen & Mathias Cramm & Pieter Johannes Verkerk, 2022. "Wood-Based Products in the Circular Bioeconomy: Status and Opportunities towards Environmental Sustainability," Land, MDPI, vol. 11(12), pages 1-16, November.
    6. Elias Hurmekoski & Juulia Suuronen & Lassi Ahlvik & Janni Kunttu & Tanja Myllyviita, 2022. "Substitution impacts of wood‐based textile fibers: Influence of market assumptions," Journal of Industrial Ecology, Yale University, vol. 26(4), pages 1564-1577, August.

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