Forest sector modelling in Europe—the state of the art and future research directions

In spite of many changes in European forest sector markets and industries since the 1990s, a comprehensive synthesis on the econometric and forest sector modelling research conducted in the European market context is missing. In this survey, we attempt to remedy this defect by investigating the scope and focus of the research done during 1998–2007, and identifying the gaps and areas for future research. The main avenues of econometric market analysis are methodologically and thematically found to be focused on the following five themes: 1) modelling of product demand and supply, 2) price analysis and testing of market integration, 3) market demand and price forecasting, 4) modelling industry location and 5) production technology and factor demand. Within forest sector modelling, studies on Europe can be classified into three categories: those studying the effects on the future development of the forest sector of assumptions concerning GDP growth, forest growth and technological changes; those studying the effects of forest conservation; and finally, those that are concerned with forest bio-energy. In conclusion, the application of time series econometrics in the forestry sector has in the recent years become less common in Europe in general, and little or no research has been carried out in many important fields, e.g., modelling the linkages between different market levels and multi-country market studies. This also casts some doubt on the structure and parameters of the currently more actively applied numerical partial equilibrium models, which must consider multi-level, multi-region market issues.