Price Impact Analysis of Increased Biofuel Production on Forest Feedstock Markets  : A Spatial Explicit Approach for Sweden

• This paper introduces a model of price determination to analyze the impacts of increased biofuel production on forest feedstocks markets in Sweden. The model is based on a spatially-explicit, demand-supply framework. Data on forest biomass supply and harvest cost at the gridcell level is available for Sweden for 334 0.5x0.5 degree gridcells. We use the data to construct supply curves, both at the national level and sub-national level. The supply and harvest cost data is available for four forest commodities: branch & tops, pulpwood, sawlogs and stumps. The latter are further distinguished depending on the type of harvest operation: thinning or final felling. On the demand side, the model is calibrated using data on current demand for each feedstock at gridcell level. Demand scenarios for different biofuel targets are generated from the BeWhere-Sweden model at the gridcell level, which allow us to investigate the potential impacts on market price as approximated by the harvest cost data. We run simulation scenarios for increased biofuel production from forest biomass for Sweden: a 10 and 20 terawatt hour (TWh) of biofuel by 2030. As expected, the results show that increased demand pressure on the forest biomass will tend to push prices up. The magnitudes of change are highest for pulpwood and branches & tops from final felling, where they reach 0.004% to 18.95% and 0.001% to 7.2% respectively. With respect to the spatial distribution of price change, we notice that it matches expectations as they map out with the spatial distribution of supply and demand.

Ämnesord

SAMHÄLLSVETENSKAP  -- Ekonomi och näringsliv -- Nationalekonomi (hsv//swe)

SOCIAL SCIENCES  -- Economics and Business -- Economics (hsv//eng)

Nyckelord

Economics

Nationalekonomi

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