Modelling the Competition for Forest Resources: The Case of Sweden

Past decades increasing shares of forest resources have been diverted from the forest sector to the energy sector. The increasing utilization of forest fuel is, to a large extent, caused by economic policies introduced to reduce the emission of greenhouse gases. Since the energy sector is believed to continue to increase its use of forest fuel in the energy production in Sweden, it is of interest to investigate the effects of this. The purpose of this study is to analyses the extent and degree of forest resources competition in the presence of climate policy by accounting for the inter-linkages of forest resources utilization between the energy sector and the forest industries. A partial equilibrium model was thus constructed and applied to the Swedish forest sector and energy sector. A baseline scenario is calibrated using the GAMS software. Four scenarios with alternative development paths are then simulated and compared to the baseline scenario. The results indicate that the impacts on the procurement competition between the forest sector and the energy sector are relatively moderate also in situations of expanding production in the forest industries. An increase in the competition between industries in the energy sector can however be observed.