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Arkansas Forest Economics
AFA Teacher Conservation TourJune 24, 2016, Monticello, Arkansas
Matthew PelkkiAssociate Director, Arkansas Forest Resources Center
George H. Clippert Endowed Professor of ForestrySchool of Forestry and Natural Resources
University of Arkansas at Monticello
OutlineEconomic impact of forest
industries in Arkansas
Biofuels / bioenergy
New forest products
Carbon credits in forestry
Economic impact of forest industries in ArkansasArkansas Forest EconomicsAFA Teacher Conservation TourJune 24, 2016, Monticello, Arkansas
Direct employment of 28,057
Average labor compensation of $51,939 annually (133% of state avg.)
Direct contribution of $2.9 billion to GSP
Arkansas’s Forest Industry Economy – 2014 (latest data)
~ 70,000 jobs in Arkansas
~ $3.6 billion in wages
~Value added of $6.3 billion
Economic Multipliers and total impact
Tax contribution by Arkansas’s Wood manufacturing IndustriesState and local taxes:
$400 million
Federal Taxes: $700 million
Sustainable timber supply?
1978 2015Hardwoods323,925,06
557%
Softwoods247,516,91
643%
Hardwoods532,821,33
159%
Softwoods366,783,43
941%
Surplus of nearly 15 million tons every year today!
Biofuels / bioenergyArkansas Forest EconomicsAFA Teacher Conservation TourJune 24, 2016, Monticello, Arkansas
Wood pellets
Let’s start an experiment with two kinds of wood pellets…..
Coal15.614
16%
Natural Gas28.319
29%Petroleum
35.37336%
Nuclear8.3389%
Renewable9.67510%
Primary Energy Use by Sector 2015Total USA = 97.5 quadrillion Btu
Hydro-elec-tric
238925% Geo-thermal
2242%
Solar5506%
Wind181619%
Biomass469649%
Renewable Energy Consumption in the USA 2015
Values are in trillions of BTUs
Biofuels200743%
Waste49611%
Wood217046%
Biomass Energy Con-sumption in USA, 2015
Values are in trillions of BTUs
Wood vs. other renewable energy sources in USA Wood represents
about 2% of our total energy consumption
Wood is 85% of hydro-electric energy
Wood is 135% of wind energy
Wood is 711% of solar energy
How is wood energy used in the USA? 25% used in residential heating
About 10% of US households use wood for heating
75% used for industrial generation by wood products industry This represents about 65% of total
energy used by industry The other 35% of energy is fossil-fuel
based
Bioenergy or biofuels from wood?
Bioenergy from woody biomass is a proven technology – combustion of wood powering combined heat and power (CHP) facilities
Biofuels relies on conversion of wood into some liquid transportation fuel Enzymatic conversion (ethanol) Thermo-chemical conversion
(gasification/pyrolysis) Technological difficulties
In wood industry, CHP works!
Wood burned to generate steam
High pressure steam drives electrical turbines
Low pressure steam dries wood and paper
An Arkansas exampleGeorgia-Pacific Paper
Mill at Crossett, AR75% of electrical needs
generated internally100% of steam
(heating) needs generated internally
Still, daily Entergy bill averages $30,000 for electricity
What do our wood pellets look like now?
New forest productsArkansas Forest EconomicsAFA Teacher Conservation TourJune 24, 2016, Monticello, Arkansas
“New” forest products opportunities
Multi story wood buildings
New architectural designs
Wood plastic composites
Nano technology from wood
Cellulose film
Filtration and selectively permeable membranes
New printing technologies – smart paper surfaces
=New medicines
Carbon credits in forestryArkansas Forest EconomicsAFA Teacher Conservation TourJune 24, 2016, Monticello, Arkansas
Where do trees and forests sequester carbon?Living biomass
Shrubs and other vegetation
Forest floor carbon
Soil carbon
More carbon sequestration in wood products
Major issues for carbon markets
Carbon trading pools
AdditivityReserve poolContract lengthLeakage
An example of how a landowner can get paid for sequestering carbon in their growing forest
Getting greenbacks from greenhouse gases
1. A qualified forest
2. Measure currentcarbon sequestration
3. Landowner signs contract with carbon
broker
4. Carbon broker produces CFI contract and
sells it on carbon
exchange
5. Landowner receives payment
for sale of CFI(less commissions and
fees)
Carbon sequestration rates for forests
Age Loblolly-shortleaf
Oak-hickory
1-5 2.33 1.706-10 2.37 2.2011-15 2.12 2.3316-20 1.91 1.9921-25 1.99 2.0126-30 1.82 1.83
Metric tons of carbon dioxide per acre per year sequestered in the southeast United States
The situation….A landowner has a 100-acre
stand of pine trees that was just planted and is 1-year old.
The landowner will let the pine trees grow for 15 years and then harvest them
The value of carbon (dioxide) is $3.00 per metric ton
What is the value of the carbon sequestration?
Using the table of CO2 sequestration
YearCO2
Sequestered per acre
Price of CO2 Value per acre
Value on 100 acres
1 2.33 $3.00 $6.99 $699.00 2 2.33 $3.00 $6.99 $699.00 3 2.33 $3.00 $6.99 $699.00 4 2.33 $3.00 $6.99 $699.00 5 2.33 $3.00 $6.99 $699.00 6 2.37 $3.00 $7.11 $711.00 7 2.37 $3.00 $7.11 $711.00 8 2.37 $3.00 $7.11 $711.00 9 2.37 $3.00 $7.11 $711.00
10 2.37 $3.00 $7.11 $711.00 11 2.12 $3.00 $6.36 $636.00 12 2.12 $3.00 $6.36 $636.00 13 2.12 $3.00 $6.36 $636.00 14 2.12 $3.00 $6.36 $636.00 15 2.12 $3.00 $6.36 $636.00
Total $10,230.00
What happens to the carbon in trees that are harvested?
A lot remains in logging slash, stumps, and roots and eventually decays (about 50% of a tree)
About 50% of the logs are bark and wood waste that are burned for energy
About 25% of tree biomass becomes paper, lumber, and other wood products
For lumber, about 10% of it remains in wood after 100 years.
