Modeling the North American Demand for Solid Wood Products with an Emphasis on Canada

Abstract

A spatial equilibrium model of the North American solid wood sector has been developed jointly by the Canadian Forest Service and the Forest Products Laboratory of the USDA Forest Service. The model, NASAW, is constructed using the Price Endogenous Linear Programming System, PELPS III, and provides 20-year forecasts of prices, quantities and manufacturing capacities for six North American regions: representing Canada (British Columbia Coast, British Columbia Interior, and the rest of Canada) and the United States (North, South and West). Two broad offshore demand regions (Atlantic and Pacific) are also included for each country. Demand and supply are described by equations that define quantity as a function of price. Manufacturing technologies are represented by processes that convert raw materials into primary products (lumber, plywood, OSB-waferboard and particleboard-MDF) and primary products into secondary products (engineered lumber, trusses, foam core panels). Both primary and secondary products are used in single and multi-family house construction. The model tracks shifts in the type of construction system used as a result of changes in relative prices. Raw materials, primary and secondary products, and by-products can all be exported. Forecasts are made for housing demand, manufactured product consumption and production (lumber, structural and non-structural panels), and fiber supply (hardwood and softwood). The model provides a useful framework for analyzing a broad range of trade-related and product substitution issues. Preliminary results show a continued increase in the importance of the United States South and eastern Canada as major suppliers of lumber and structural panels to the North American market.