What are the wood supply and timber market implications from emerging bioenergy demand?  We just published a white paper on this topic commissioned by the National Alliance of Forest Owners (NAFO).  The research was motivated by concerns about potential impacts of wood bioenergy markets on the established forest products industry, on forest management decisions, and on the environment in the US.

We examined how the current forest industry evolved over time and the impact of new market entrants. Key findings include:

• From 1999 to 2009, paper and paperboard production declined by 19% as the digital age and falling economy reduced paper consumption. As the paper industry declined, OSB and particleboard plants expanded, which use the same type of raw materials as pulp and paper mills. Increases in wood use by OSB plants in the 2000s partially offset decreased wood use by the pulp and paper sector.
• Total forest growing stock on timberlands has increased in the United States. Despite timber market expansion for paper and lumber markets in the 1990s and the growth of a new industry (OSB), the forest products industry did not deplete raw material supplies. For example, total forest growth net of removals increased by 101% from 1986–2006 in the South. Softwood growth net of removals on private timberlands in the South increased by 97% from 2006-2009. Recent increases in net growth in the South are due primarily to declining markets for forest products since 2005.
• There is insufficient evidence to suggest a regional or national shift in pulpwood markets, especially given the modest outlook for the pulp and paper sector for the next 10 years. Given the expected lower levels of wood use by the pulp and paper sector, some portion of the pulpwood supply will likely be available for bioenergy uses, assuming sufficiently robust market prices.

We also analyzed how much woody biomass markets in the South must evolve to affect landowner decisions with respect to harvest rotations. Forecasted pine pulpwood prices in the South in 2016 would have to increase from $11.47 per ton to higher than chip-n-saw prices of $17.09 per ton for landowners to be economically indifferent between a pulpwood-dominated forest and a sawtimber-dominated forest. Across the South, bioenergy demand would have to increase 435% by 2016, from an expected 22 million green tons a year to 120 million green tons per year, for pine pulpwood prices to reach $17.09/ton. Biomass energy wood use will have to be high enough for a sustained period to maintain high pine pulpwood prices to cause a shift in landowner behavior. At the same time, competing higher-valued product prices would have to remain at prices low enough to incent switching from pulpwood to sawtimber rotations. Once established, these prices would have to remain economically feasible for over 23 years to incent multiple pulpwood rotations on the same property. Overall, the analysis suggests that a significant shift from sawtimber to pulpwood rotations in the South is highly improbable. 

To download and read the complete study, click here.