Effects of global climate change on the US forest sector ... ?· Global climate change may modify the…

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<ul><li><p>CLIMATE RESEARCHClim Res</p><p>Vol. 15: 195205, 2000 Published September 5</p><p>1. INTRODUCTION</p><p>Global climate change may modify the growth andgeographic distribution of US forests. Although severalstudies have attempted to estimate the biologicaleffects of climate change on forests, the magnitude anddirection of these effects remain uncertain (see Joyceet al. 1995, Sohngen &amp; Mendelsohn 1998, Winnett1998). For example, using 6 biogeographic simulatorconfigurations under a single weather scenario, Sohn-gen &amp; Mendelsohn (1998) found that total inventoryvolume of Southern pine ranges between 28% aboveand 29% below base levels. For western Douglas-fir,their estimates range from 35% above to 35% belowbase levels. Such wide ranges are not very informative.</p><p>Research to clarify forest growth impacts continues,but it is clear that a comprehensive understanding willemerge only gradually. This uncertainty in growthimpacts leads to similar ambiguity in derivative studiesof the effects of global change on the industries andconsumers that use the forest resource.</p><p>The present study investigates the potential eco-nomic impacts within the forest sector due to alter-ations in forest growth arising from global climatechange. We employ a dynamic model of the US forestsector (FASOM, described in Adams et al. 1996, 1997and Alig et al. 1998) that simulates both timber marketand resource management responses. Given the con-siderable uncertainty about the biological impact ofglobal change on forests, however, we do not examinea single scenario or group of scenarios but ratherdevelop a set of response functions. Estimated withFASOM simulation results generated across a broad</p><p> Inter-Research 2000</p><p>*Senior author; E-mail: mccarl@tamu.edu.The other authors each made equal contributions</p><p>Effects of global climate change on the US forestsector: response functions derived from a dynamic</p><p>resource and market simulator</p><p>Bruce A. McCarl1,*, Darius M. Adams2, Ralph J. Alig3, Diana Burton4, Chi-Chung Chen1</p><p>1Department of Agricultural Economics and 4Department of Forest Science, Texas A&amp;M University College Station, Texas 77843, USA</p><p>2Department of Forest Resources, Oregon State University, Corvallis, Oregon 97331-5703, USA3US Department of Agriculture, Forest Service, Pacific Northwest Experiment Station, 3200 SW Jefferson Way, Corvallis, </p><p>Oregon 97331, USA</p><p>ABSTRACT: A multiperiod, regional, mathematical programming economic model is used to evalu-ate the potential economic impacts of global climatic change on the US forest sector. A wide range ofscenarios for the biological response of forests to climate change are developed, ranging from smallto large changes in forest growth rates. These scenarios are simulated in the economic forest sectormodel and results are summarized in response functions that may be used instead of rerunning themodel as improved or altered biological response scenarios arise. The response functions are used tocharacterize broad impacts of climate change on the sector. We find that aggregate impacts (acrossall consumers and producers in the sector) are relatively small but that producers income and futurewelfare 30 to 40 yr in the future are most at risk. The forest sector is found to have adjustment mech-anisms that mitigate climate change impacts, including interregional migration of production, substi-tution in consumption, and altered stand management.</p><p>KEY WORDS: Climate change US forest Sector analysis Response function</p><p>Resale or republication not permitted without written consent of the publisher</p></li><li><p>Clim Res 15: 195205, 2000</p><p>range of possible biological outcomes, the responsefunctions summarize the model projections of an arrayof measures of sector performance as stimulated by awide variety of changes in forest growth. Employingthese functions, analysts can explore particular climatechange scenarios and rapidly generate projections ofthe associated economic effects as new findings ariseon biological growth impacts. The following sections ofthis paper describe problem background, prior studiesand then the methods employed to develop the re-sponse functions. Subsequently, we illustrate how theresulting functions can be used to provide specific andgeneral characterizations of impacts.</p><p>2. FOREST RESOURCE AND PRODUCT MARKET IMPACTS OF CLIMATE CHANGE</p><p>Global atmospheric change would affect tree grow-ing conditions, but the nature of the altered climatecould vary substantially in different regions. Impacts onforests arise from increases in atmospheric CO2 concen-tration, change in temperature regimes, and variationsin patterns of rainfall over the year. These shifts wouldalter basic physiological processes in trees and soils,influencing tree growth and the yield of commercialproducts over time. The actual time pattern of changewill be complex, owing to lags between atmosphericchanges, climate effects and biological responses (seeWinnett 1998 for a review of the growth change issues).Economic impacts resulting from growth changes willbe further delayed due to the length of forestry rota-tions, generally involving 2 or more decades.1 Thus, anexamination of the effects of climate change on forestsneeds to consider forest rotation decisions as well aslags between the onset of climate change and realizedbiological impacts. These dynamic aspects of climate-induced changes in forest yield need to be addressedwith a model that recognizes the temporal characteris-tics of both product markets and the forest resources.</p><p>Climate change may alter the quantities of forest prod-ucts harvested in a substantial fashion. In regions whereclimatic effects reduce growth, smaller volumes will beavailable for harvest in both existing forest stands and inthose replanted after harvest in the future. The reversewould be true in regions experiencing increased growth.Such changes will alter the supply of products to nationaland international markets, changing the prices of forestproducts and the economic welfare of both consumersand producers of these products. Consumers, in turn, willshift their patterns of consumption between forest andnon-forest products. Producers will change both the</p><p>types of management they practice (planting, thinning,and other cultural treatments) and the ages at which theyharvest trees in various ways, depending on the natureof the owner (private or public). Further, since climatechange is global in nature and a considerable portion ofUS softwood timber consumption is of Canadian origin,the implications of climate change for harvest in Canadamust also be recognized.</p><p>The difference between climate change effects on ex-isting trees and trees planted at some future date bearsfurther emphasis. Existing trees will be affected only intheir incremental growth from the current period toharvest age as climate change occurs. Trees planted inthe future will grow entirely in an environment with al-tered climate. Thus, growth rate responses must differfor existing and future trees. For existing trees, currentvolume will remain unchanged but future incrementalgrowth may vary. For new trees, the entire future timepath of volume growth and product yield may be altered.</p><p>3. PAST STUDIES OF THE FORESTRY EFFECTS OF CLIMATE CHANGE</p><p>Much has been written about the potential effects ofclimate change. Several studies have explored climatechange implications for the agricultural sector (e.g.,Adams et al. 1990, 1999, Kane et al. 1992, and others asreviewed in Adams et al. 1998 and Lewandrowski &amp;Schimmelpfennig 1999). In forestry, however, knowl-edge of the biological response is limited. Comprehen-sive experiments have not been completed on howtrees behave over long periods when exposed to alter-native climates, nor can observations on existing forestsbe used with confidence since CO2, moisture and tem-perature regimes of the type that may be associatedwith future climate change are not observable. Little isknown as well about how experimental results onresponses of individual trees generalize to stand andforest levels (Winnett 1998).</p><p>A few studies have examined potential impacts ofclimate change on the forest sector. Van Kooten &amp;Arthur (1989) studied hypothetical increases in the bio-mass of certain Canadian forests. They conclude thatthe overall implications of climate change for economicwelfare may be negative for Canada.2 In a later studyvan Kooten (1990) examined the impact of 5 and 7.5%increases in Canadian harvests together with positiveand negative changes of similar magnitudes for US</p><p>196</p><p>1Forest rotation or harvest age is the length of time that treesare grown from planting to final harvest</p><p>2Economic welfare refers to the combination of producer prof-its and consumer well-being measured in monetary termswhich results from the interaction of supply and demand in amarket. Forces that shift demand and supply influence theoverall level of welfare in the market and the distribution ofwelfare between producers and consumers</p></li><li><p>McCarl et al.: Climate change effects on US forests</p><p>harvests. He concluded that consumers in both coun-tries would benefit, but that producers would lose, andthat the overall Canadian impact would be positiveonly if US harvests declined.</p><p>Perez-Garcia et al. (1997) examined climate changeeffects on the world forest economy using a single-yearmodel. They assumed climate change would stimulateincreased net primary production and found that as aconsequence timber became more abundant, price fell,and consumption increased. Also major timber produc-ers such as Canada were found to receive a positive,but small, economic gain, while the United Statesbenefited under all scenarios examined. In their study,adaptation (e.g., altering management or replantingwith different species of trees to change forest types ina region) was ignored, with forest management actionstreated as external to the analysis.</p><p>Callaway et al. (1994) employed an early version ofFASOM together with climate and ecological modelsto examine a doubled CO2 equilibrium climate. Theirstudy estimated how harvests could shift over time,along with changes in tree planting investment, aspart of the dynamic adjustment of markets and capitalstocks to global change. The study used timber demandinformation from the USDA Forest Services ResourcesPlanning Act (RPA) Assessment database and modelingsystems (see, e.g., Haynes et al. 1995, Adams &amp; Haynes1996) and resource information similar to that used inthe Joyce et al. (1995) study. The treatment by Call-away et al. (1994) of existing forests was somewhat un-realistic, however, in that initial tree inventories as wellas subsequent growth were adjusted instantaneouslyfor climate change impacts. Further, they did not adjustproduction either from Canadian forests or forests onpublic lands in the United States.</p><p>Sohngen &amp; Mendelsohn (1998) linked a dynamicmodel of US timber markets with a large-scale bio-geographic model. This application provided moreinformation on the dynamic adjustment of markets andresources than the Perez-Garcia et al. (1997) study,although it also assumed a doubling of CO2 to an equi-librium level that leads to steady-state biogeographicalresults. The market model employed in this study isless complex than the FASOM model used by Call-away et al. (1994), containing less regional and owner-ship detail. Similar to Perez-Garcia et al. (1997), Sohn-gen &amp; Mendelsohn (1998) found that climate changeexpanded long run timber supply under all scenarios.Welfare effects were relatively small, with an averagepresent value of about +$20 billion.3 The analysis sug-</p><p>gests that human actions in markets can mitigate, andeven reverse, resource production shifts induced byclimate change (Sohngen et al. 1998).</p><p>Rather than drawing directly on growth change esti-mates derived from ecological models, Burton et al.(1994, 1998) considered hypothetical cases of extremebiological response, representing probable boundson the range of forest response to stresses induced byglobal change. The study used the FASOM model tolook at 3 scenarios of extreme change in growthinduced by global climate change: a 50% increase indecadal growth rates on timberland in both the USNorth and South; a 50% decrease in both regions; anda 50% increase in the North and a 50% decrease in theSouth. Simulation results indicated that producersimpacts exceed those on consumers and that Southernproducers are affected more than producers in otherregions.</p><p>4. BASE MODEL EMPLOYED FOR SIMULATINGFOREST CLIMATE CHANGE EFFECTS</p><p>The forestry portion of the FASOM model, which isan acronym for Forest and Agricultural Sector Opti-mization Model, as documented in Adams et al. (1996,1997) and Alig et al. (1998), was employed to deriveprojections of forest sector production, prices andwelfare given a climate change scenario. FASOM is amultiperiod, non-linear, price-endogenous, mathemati-cal-programming, economic model that provides 100 yrprojections. FASOM depicts the volume removed, areaharvested, and management investment decisions forindustrial and non-industrial private forests, togetherwith the consumption of timber products and marketprices in the US forest sector by major forest region.Products comprise fuelwood, sawtimber, and pulp-wood for both softwood and hardwood species. Acresharvested from public lands and the import supply oftimber from Canada are assumed to be determined byforces outside the present analysis and are taken asexogenous input although volumes are affected by cli-mate change.</p><p>The biological effects of climate change are intro-duced in the analysis by modifying timber yields inFASOM. The FASOM yields (volumes per unit area)vary by the age of the forest and an array of conditionsthat reflect the quality of the growing site. The exam-ple in Table 1 gives the total volume per unit area in aforest stand at the end of year 1 as Y1, in year 2 as Y2,and in year t as Yt. Suppose we anticipate a decrease inthe growth rate of (for 0 1) induced by climatechange. Total volume in period 1 would be adjusteddownward by . In all subsequent periods the volumeat the end of the period would be the volume at the</p><p>197</p><p>3This is the adjustment due to the climate change scenario.With the total market welfare level (the sum of producer andconsumer benefits) at roughly $283 billion, this change rep-resents about a +7% shift</p></li><li><p>Clim Res 15: 195205, 2000</p><p>beginning of the period times 1 plus the altered growthrate. The altered growth rate is the original growth ratein the yield table, (Yt Yt1)/Yt1, times 1 minus . Asimilar approach was used to treat existing stands.However, for a stand of trees that is t 1 yr old at thebeginning of the analysis, only the formula for a standat age t is employed, treating Yt1 as a constant andleaving the initial volume unchanged.</p><p>Modifications were also made in public cut andCanadian import supply to reflect the impacts of cli-mate change. Volumes from these sources were ad-justed by the average percent change in harvestobserved in comparable regions on private lands in theUn...</p></li></ul>

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