Journal of Forest Economics > Vol 32 > Issue 1

Modelling of uncertainty in the economic development of the Norwegian forest sector

Eirik Ogner Jåstad, eirik.jastad@nmbu.no , Walid Fayez Mustapha, walid.mustapha@nmbu.no , Torjus Folsland Bolkesjø, torjus.bolkesjo@nmbu.no , Erik Trømborg, erik.tromborg@nmbu.no , Birger Solberg, birger.solberg@nmbu.no
 
Suggested Citation
Eirik Ogner Jåstad, Walid Fayez Mustapha, Torjus Folsland Bolkesjø, Erik Trømborg and Birger Solberg (2018), "Modelling of uncertainty in the economic development of the Norwegian forest sector", Journal of Forest Economics: Vol. 32: No. 1, pp 106-115. http://dx.doi.org/10.1016/j.jfe.2018.04.005

Publication Date: 0/8/2018
© 0 2018 Eirik Ogner Jåstad, Walid Fayez Mustapha, Torjus Folsland Bolkesjø, Erik Trømborg, Birger Solberg
 
Subjects
 
Keywords
JEL Codes:C61C53C55D81Q23
Forest sector modellingMonte CarloNorwayPartial equilibriumShort-term uncertaintyUncertainty
 

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Introduction 
Method 
Results 
Discussion 
Conclusions 

Abstract

Quantitative forest sector modelling includes many model parameters that are treated as being deterministic in the modelling framework, but are in reality often highly uncertain. Few studies have addressed the impacts of this uncertainty and the main objectives of this article are to quantify major market uncertainties in the Norwegian forest sector and analyse their impacts on the results of a forest sector model study for Norway. The uncertainties are derived from historical time series of the prices and exchange rates for international forest products, and their possible impacts are addressed by applying a Monte Carlo approach. A probabilistic approach in modelling is found to have significant impacts on harvest and forest industry production levels. When uncertainty is included, the relative standard deviation for modelled harvest levels varies from 15% to 45%, while for forest products the standard deviations vary from 30% to 80%. We conclude that the most important uncertainty factor for the Norwegian forest sector is the development of international forest product markets, and improved data on demand should be given high priority in future forest sector modelling development.

DOI:10.1016/j.jfe.2018.04.005