Economic analysis of wood products: system dynamics approach

Abstract Article is about economic analysis of promising wood products in Latvian forest sector. Three products: bio-oil, lyocell and xylan were analyzed. Currently none of the products are manufactured in Latvia. System dynamics modelling was used to determine which of the products have higher added value and which of them is more feasible. Input data for the model was taken from scientific literature and from already existing factories. It was assumed that the chosen products were manufactured as separate products, while treating the leftovers as energy source or waste. It was done to see how feasible the products are on their own. Results show that for both bio-oil and lyocell there is a positive profit value with a possibility to increase it even more in the future, while decreasing the share formed by capital costs. In case of xylan, the profit is negative, which makes xylan unprofitable. Although xylan is not feasible as a separate product, its value can be increased by manufacturing it together with other co-products, which can be obtained and manufactured from wood leftovers, therefore decreasing the specific capital costs per product and using wood in efficient manner.