VTechWorks Repository :: Browsing by Author "Wisdom, Harold W."

Browsing by Author "Wisdom, Harold W."

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Analysis of Policy Reforms in the New Zealand Forest Manufacturing Sector
Grebner, Donald L. II (Virginia Tech, 1998-04-10)
New Zealand experienced dramatic restructuring programs after the Labor party won the national elections in 1984. Deregulation of price controls, removal of the log export ban, and privatization of public assets were the main shocks to the forest sector. The purpose of this paper is to analyze the impacts of these reforms on wood and paper industry cost, production, and cost efficiency. Unlike previous work, the effects of privatization and deregulation are compared to determine which shock had the most influence on the forest sector. Results show that production decreased, total cost increased, and cost efficiency decreased after deregulation for the sector, and that deregulation was more significant than privatization for the wood and paper sectors. In particular, removal of the log export ban had the greatest impact, while privatization had little effect on industry production and cost. This suggests that countries with comparative advantages in wood processing who implement deregulation or privatization may suffer through a short term period of lower cost efficiency as the economy adjusts to higher input costs in those sectors. In New Zealand's case, the adjustments most likely affecting efficiency have been investments in new technologies, which require time to attain maximum efficiency. The results are contrary to other studies that have predicted increased efficiency as a result of privatization.
A comparison of potential agricultural and forestry investment returns for Virginia's marginal lands
Deaton, Stuart A. (Virginia Tech, 1988-05-05)
In the past five years, most agricultural producers in the United States have suffered from depressed conditions in the commodity markets. The supplies of basic food commodities have burgeoned, demand has fallen, and price levels have declined, despite $55 billion in U.S. Department of Agriculture (USDA) commodity support program expenditures since 1983 (FAPRI, 1988). Since the early 1980's, farm income and asset balances have declined and debt has risen, increasing the financial stress for many producers. The financial strain could be more acute for those operators with a significant proportion of marginal land in production. Conversely, the USDA Forest Service recently projected that during the next 30-to-40 years softwood forest product demand will increase, available supplies will decrease, and real price levels will increase (USDA Forest Service, 1987). These conditions create the option of converting marginal agricultural lands to forestry investments. A technique was developed to compare possible financial returns between prevalent cropping systems and forestry investments on marginal soil series throughout Virginia. Crops and tree species used in the study include the following: corn (Mays L.), soybeans (Glycine max), soft red winter wheat (Triticum L.), orchard grass (Festuca L.), clover (Trifolium L.), fescue (Festuca L.) pasture, and loblolly pine (Pinus taeda L.), and eastern white pine (Pinus strobus). With state-of-the-art management regimen for agricultural production, annual profit or loss estimates were computed for a variety of soil productivity classes and market price levels. Intensive management was also prescribed for the forestry investment analysis. Using current inputs and projected market price levels, a cash flow analysis program computed equal annual equivalent (EAE's) values for the investment analyses to derive results comparable to those for agriculture. Under the "base" assumptions and current and foreseen markets, forestry investment was determined to be competitive with agricultural production on the marginal soil series. However, government subsidies, benefiting both forest products and agricultural production, complicate the results. Further, the dependency of both markets on macroeconomic and other exogenous variables precludes any guarantee of investment performance over the 35-to-45 year investment horizon for either alternative. The study does provide a foundation for financial comparison, to which a landowner might add individual, subjective evaluations of land use (and financial criteria and assumptions) to reach a decision about the utilization of marginal agricultural lands.
Constructing the problem of "slash-and-burn" agriculture
O'Brien, William Eugene (Virginia Tech, 1996-05-17)
"Slash-and-burn" agriculture, or shifting cultivation, is perceived by many to be the leading cause of land degradation in tropical forests. Performed mainly by resource-poor farmers, shifting cultivation is the most widespread form of agriculture in the tropics. Concern over its environmental impacts has led to calls throughout the twentieth century for alternatives by policy-makers and development planners. This study employs a constructivist framework, post-colonial perspectives, and rhetorical methods to understand the images which support such assertions regarding shifting cultivation, primarily in policy-oriented depictions. Elements of Kenneth Burke's "dramatistic" method are used, including the analysis of hierarchies which structure discourse, and pentadic analysis.
Determining the Financial Feasibility of a Wood Products Industrial Park
Walters, James T. (Virginia Tech, 1998-05-05)
A methodology was developed for determining the economic feasibility of a wood products industrial park. The methodology consists of twelve steps that address the goals of park owners, the feasibility of secondary manufacturing alternatives, the feasibility of the development corporation, and the financial areas needing management attention. Prerequisites to the financial analysis include market and technical analyses. Community impact analysis was also acknowledged as an important component of an overall feasibility analysis. A case study was performed that consisted of an economic feasibility analysis for a wood products industrial park in Southwest Virginia. The case study assumed private ownership and found that the best mix of park tenants included: an edge-glued dimension panel manufacturer, a solid dimension lumber manufacturer, a custom millwork manufacturer, and a pallet manufacturer. Primary manufacturing and marketing services were included in the preferred park formation as subsidiaries of the park development corporation. The park was predicted to have a strong positive impact on the regional economy.
Donations and sales of conservation easements on forestland in the Northern Forest of New York State
Bick, Steven (Virginia Tech, 1996-10-27)
This is a study of conservation easements of forestland in the Northern forest Region of New York State. Forestland easements are the subset of conservation easements encumbering forestland. As of 1995, there were 79 of these forestland easements within the study area. Of this total of 79 forestland easements, 50 were granted as donations and the remaining 29 were granted in sales. Most forestland easement donors were individuals or related individuals. Forestland easement sellers are split between industrial owners and individuals. Eight forestland easement grantees in the Northern Forest Region were identified. This group of grantees includes one public agency and national, regional, and local land trusts. Deeds to the forestland easements inventoried in this study contain 155 separate variables. These variables reflect the differences in encumbered properties, ownership goals of grantors, and land management goals of grantees. Deed information shows that forestland easements have a broad common purpose of preventing change or directing change in an acceptable manner. The specifics of preventing and directing change will vary with each property. The limits of acceptable change are a large part of working out the agreement between grantor and grantee. Interviews with both donors and sellers reveal that, in retrospect, most are satisfied with their decision to grant the forestland easement. Analysis of forestland easement deed content reveals embedded potential future problems for owners of encumbered properties. Recommendations contained in this report provide guidance for landowners considering the grant of a forestland easement and suggestions for deed content. Most landowners made forestland easement granting decisions that are favorable from their perspective, but less than optimal from outside observation.
An Investigation of Factors Leading to Establishing Downstream Timber Processing in Malaysia
Hashim, Norchahaya Jr. (Virginia Tech, 1998-08-04)
The Malaysian timber industry has made tremendous progress towards making this sector one of the country's important foreign exchange earners. From a major exporter of tropical logs, it shifted to become a reliable exporter of high quality sawn timber during the 1980s. Realizing the need to maintain long availability of its raw material supply and with the intention of achieving higher value from its timber resource, Malaysia has decided the direction and future of its timber sector. The first Industrial Master Plan (IMP) was launched in 1985 with the objective of making Malaysia a highly visible and reputable center for furniture, joinery, and molding. Therefore, this study is intended to assess factors leading towards promoting the use of timber in downstream processing furniture manufacturing. This study had four objectives. Firstly, to identify and describe factors that affect the export performance of furniture. Secondly, this study described trade policies, incentives, and government efforts that supported the development of the furniture industry in Malaysia. Thirdly, a regression model was used to quantify the relationships among these factors in order to predict the export of wooden furniture from Malaysia. Lastly, this study suggests measures that could be taken to enhance the position of the Malaysian furniture industry in the global market. In understanding the position of Malaysia's furniture market, this study began with a review of international furniture trade and policy development. Two of the world's major markets for furniture, the United States and Japan, were examined to understand their furniture industries, requirements, and market trends. In addition, brief profiles were presented of furniture and related industries and markets of three significant furniture suppliers from Asia: Taiwan, Indonesia, and Thailand. The structure of Malaysia's furniture industry was examined and reviewed, in order to have a better understanding of its size and export potential. The Malaysian furniture industry is comprised of small units of factories, particularly the factories located in the furniture villages and accounting for 70% of the numbers. Seventy five percent of these medium and large factories are locally owned and the remaining are either joint ventures or foreign owned. To help expedite the objective as specified under the IMP, the Malaysian government and its agencies have formulated several measures, with the purpose to provide an industrial and business environment conducive to the industry. In this study, important factors which influenced the development of this sector were examined. The supply of raw materials has been an important factor that could affect the establishment of the processing industry and its competitiveness. In addition to this, the current issue of Malaysian Ringgit depreciation has been taken into account. The Malaysian exchange rate to the U.S. Dollar was linked to the United States import price indexes to see their impact on the export performance of Malaysian furniture. The supply and price variables were found significant and elastic to the export of furniture from Malaysia. The export predictions were made for three-year periods. Due to the financial crisis that hit Asia last July, there are many uncertainties on these independent variables that could affect the accuracy of the export predictions. Nevertheless, the model developed should be useful and reliable once revised projections of these variables are made available.
Loggers' perceptions of the costs of best management practices on timber harvesting operations in Virginia
Worrell, E. Glen (Virginia Tech, 1996)
Water quality practices can have a financial impact on the cost of harvesting timber in Virginia. Two hundred seventy-two timber harvesters were surveyed to determine the estimated cost for implementing best management practices (BMPs) on harvested sites. BMPs analyzed in this study are pre-harvest planning, road construction, broad base dips, water turn-outs, water bars, streamside management zones, stream crossings, and site stabilization. Loggers provided an estimate of the cost or expense for constructing each BMP. They gave an indication of how costly these practices were to implement. The responses for each BMP were then stratified by region to determine if there were regional differences in the unit costs. With the exception of haul road construction costs, the data showed no regional differences in the unit BMP costs across Virginia. Forty-six harvested sites in Virginia were visited to determine the number of BMPs constructed for the harvesting operations. The total cost of following BMP guidelines was calculated using the state median cost, regional road construction costs, and number of practices installed on the site for each tract. The BMP cost per acre was reported by region.
Methods for modeling whole stem diameter growth and taper
Newberry, James D. (Virginia Polytechnic Institute and State University, 1984)
Stem profile models which allow for both taper and form changes (Gray 1956) were constructed and evaluated. Gray defined form to be the basic shape of the tree, e.g. cone or parabolid, and taper to be the rate of narrowing in diameter given a tree form. Ormerod's stem profile model was selected as the basic model since its parameters were readily interpretable in terms of Gray's taper and form definitions. Two stage modeling procedures were used to relate individual tree taper and form parameters to tree and stand characteristics. Two second-stage parameter estimation alternatives were evaluated. Parameter estimates for both techniques, ordinary least squares and random function analysis, were similar. Characteristics used to predict stem form were total tree height, crown ratio, height to the live crown, site index, and tree age. The taper parameter was related to diameter at breast height, crown ratio and site index. Error evaluations suggest that substantial gains in predicting stem diameters were not made using the variable taper and form stem profile models. Two methods were proposed for modeling whole stem inside-bark diameter or cross-sectional area increment. Whole stem increment models were derived from several stem profile models and Presseler's hypothesis on the vertical distribution of cross-sectional area growth. Stem profile models evaluated for constructing compatible increment models were Kozak and others (1969), Ormerod (1973), Goulding and Murray (1976), Max and Burkhart (1976), Cao and others (1980), and Amidon (1984). The increment model based on Presseler's hypothesis was derived as a generalization of the work of Mitchell (1975). Evaluations, with limited increment data, consistently showed that the models based on Presseler's hypothesis predict inside-bark diameter increment with less error than do the profile model compatible increment models. This may be due to the lack of crown information currently used in stem profile models.
A microcomputer program to analyze wood supply and economic feasibility of wood processing facilities
Donnell, R. Douglas (Virginia Tech, 1988-02-05)
Two programs, HAPWED (Hardwoods And Potential Wood-using Enterprises Database) and FIST (Facility Investment Spreadsheet Template) were developed. HAPWED is designed to analyze the feasibility of investments in wood processing facilities with respect to the economic supply of timber. The program requires user supplied databases of timber inventory, mill requirements, and product requirements. The program utilizes CONDOR III database manager. FIST is a spreadsheet template written for SuperCalc IV. It calculates the net present value, internal rate of return, and the undiscounted payback period using estimates of annual cash flows supplied by the user. Timber inventory, mill, and product databases were developed for demonstration. Eight facilities were tested for economic feasibility using FIST, two had positive NPV's (a conventional sawmill and a laminated veneer lumber mill). Analyses conducted using HAPWED indicated sufficient volume in Southwest Virginia to supply both mills from three different supply points using 50-mile supply radii.
Multiple destination trips and the economic valuation of outdoor recreation sites
Gericke, Kevin Louis (Virginia Tech, 1993-08-05)
This study examines multiple destination recreation trips and the economic valuation of recreation sites using the travel cost method. One common assumption of the travel cost method is that all travel costs incurred by a visitor are exclusively for a trip to a single site. However, this assumption is often invalid, particularly in the eastern United States where there are numerous recreation areas close to large urban populations. Few researchers have attempted to overcome the difficulty of incorporating multiple destination trips into the travel cost method. Those researchers that have proposed methods have not provided a definitive guideline for how to account for multiple destination trips in the travel cost method, and have not compared their methods. This study proposes a simple model to assist in understanding the varying suggestions by researchers who have attempted to incorporate multiple destination trips into travel cost analyses. The difficulty of defining a recreation good or service, the identification of recreation substitutes, and possible decision processes used by individuals to identify recreation trip destinations are also discussed. Data collected at Shenandoah National Park, Virginia, are used in a zonal travel cost model to estimate the consumers' surplus associated with on-site recreation use at the Park, and to compare proposed methods for handling multiple destination trips. The results of this study show that the travel cost method is sensitive to assumptions about multiple destination visitors, as well as which visitors are included in travel cost analyses. Consumers' surplus estimates ranged from $38 to $8249 per visitor, depending on the assumptions about multiple destination trips, and which visitors were included in the analyses. The results of this study suggest that the travel cost method can be used as an information system, rather than as a method to determine a single estimate of recreation value in monetary terms. The travel cost method is capable of providing a manager with information about relative magnitudes of willingness to pay for a resource by a variety of visitor groups. By varying the assumptions about visitors to the site, a manager can determine a range of consumers' surplus estimates, which may be more useful than a single estimate, to better assist in management decisions regarding the mixture of resources desired by individuals.
Optimizing loblolly pine management with stochastic dynamic programming
HÃ¤ring, Thomas W. (Virginia Tech, 1993-05-15)
This study examines effects of unpredictable price fluctuations and possible catastrophic losses on the optimal site preparation intensity of un thinned loblolly pine plantations under the assumption of lisk aversion. It concentrates exclusively on financial motives and does not take non-market values and portfolio considerations into account. The results should be interpreted with these limitations in mind. Two approaches are taken to compare site preparation intensities: a quasideterministic approach, where expected cash flows are discounted with risk-adjusted discount rates, and a stochastic approach, where probability functions of cash flows are used to maximize expected utility from net present values. The stochastic approach is further divided into non-adaptive scenarios and adaptive scenarios, where the investor can gather additional price information during the life of a stand to optimize the harvest decision. The adaptive management problem is solved with stochastic dynamic programming. For each possible harvest age, an optimal reservation price below which the forest landowner should not sell the stumpage is calculated. The study shows that the use of a single risk-adjusted discount rate is generally inadequate to compare different management intensities. The stochastic approaches reveal that the optimal management intensity depends on the degree of risk aversion, with increasing risk aversion leading to a lower intensity level. Given the possibility of catastrophic losses, the adoption of a feedback harvesting policy strengthens the already dominant influence of risk aversion and does not generally lead to an increase in management intensity. The study's results suggest that even if the landowner is managing the forest solely for financial reasons, some of the reluctance to invest in intensive forestry may not indicate a lack of interest or information but simply an economic reaction to risk, especially in regions with a high potential danger of catastrophic losses.
The potential impacts of state income taxes on timber income following the 1986 Tax Reform Act
Bettinger, Pete (Virginia Tech, 1989-04-05)
State income tax laws and their relationship to the federal income tax were surveyed and changes affecting forest landowners since similar research on this subject (1981-82) are discussed. Several previously favorable provisions were eliminated at the federal level. Although the economic situation and research assumptions have changed, the general indications are that many states have implemented provisions which may be considered generally unfavorable to forest landowners. The 1988 federal and state income tax liabilities for hypothetical forest landowners at three personal income levels, each with and without timber sale revenue, were calculated for 41 states in the U.S. which impose a comprehensive income tax. In the South, the state percentage of the total income tax liability for the hypothetical landowners who sell timber ranged from 9 to 21, 7 to 17, and 6 to 15 percent for the low, medium and high income levels, respectively. The state percentage ranged from 10 to 31, 9 to 20, and 7 to 16 percent for the low, medium and high income levels, respectively for landowners who did not sell timber. Louisiana was the lowest and North Carolina was the highest for all hypothetical cases. In the West, the state percentage ranged from 13 to 25, 12 to 25, and 10 to 19 percent, for the low, medium and high income levels, respectively, for landowners who sold timber. The state percentage for landowners who did not sell timber ranged from 10 to 34, 15 to 25, and from 12 to 20 percent the low, medium and high income levels, respectively. Arizona and Colorado consistently were among the lowest and Hawaii was the highest for all the hypothetical cases
Potential impacts of various capital gains tax structures on forest investments
Rapera, Corazon L. (Virginia Tech, 1990)
The objective of the study was to determine how various capital gains tax structures affect decisions to invest in new forest investments. These effects were measured by changes in the after-tax present values of bare land under each tax structure. The three capital gains tax structures modeled were: the current federal income tax law without basis indexing, the current federal income tax law with basis indexing, and the accrued income tax with indexing. Other things equal, the direction of effects on present values of bare land of capital gains tax structures and the other factors in the model was the same for White pine Christmas trees and Douglas fir timber. Highest present values occurred with basis indexing and lowest present values were with the accrued income tax structure, in all possible combinations of the above variables. Higher present values with basis indexing were due to tax savings. Tax saving from basis indexing per dollar of cost basis increases, reaches a maximum, then decreases as the payoff period lengthens, at a given inflation rate, with all other things equal. The payoff period that maximizes tax savings per dollar of cost basis decreases, as real interest rates increase. When the capital gains tax rate is 34% and inflation rate is 5%, and when real interest rates range from 3% to 9%, the payoff period with maximum tax savings ranges from 20 to 10 years. Since most forest investments have rotations longer than 20 years, this result implies that basis indexing will probably not affect decisions about new forest investments very much. It will also not affect the timing of gains realization for capital assets, not necessarily forestry in nature only, that had already been held for longer than 20 years. Two equity criteria were considered in the study. The first criterion requires the tax to be neutral with respect to allocation of land to different uses. The second criterion requires capital gains recipients to pay, at investment maturity and with other things equal, taxes equal to the sum of annual taxes on increases in asset value (accrued income) accumulated with interest. The study showed that, without inflation, the realized income tax (the current federal income tax) is neutral with respect to allocation of land to uses with different rotations because the tax reduces the bid prices for land uses with different rotations by equal percentages, other things equal. However, with inflation, the results suggest that basis indexing is needed in order to maintain the tax’s neutrality with respect to allocation of land to uses with different rotations. Under the second criterion, a forestry example was compared with a bank account, both with equal value growth rates. It showed that taxes paid on realized capital gains at investment maturity are lower than the sum of annual taxes on accrued income accumulated with interest, given the same tax rate. Thus, the current federal income tax, which taxes capital gains upon realization, does not meet the second equity criterion. Based on this criterion, the tax favors assets that yield capital gains over assets with annual incomes. In order to meet the second equity criterion, realized capital gains should pay taxes at the ERITAX rate. The ERITAX rate, when applied to realized capital gains, gives tax revenues equal to accrued income taxes accumulated with interest to investment maturity. However, when the annual accrued income tax rate is high, or when the rotation is long, or when the timber value growth rate is low relative to the interest rate, the ERITAX rate can exceed 100% of the capital gains, thus driving some bare land values below values in alternative uses. This result is consistent with the finding that the accrued income tax is non-neutral with respect to allocation of land to different uses and is biased against land uses with long payoff periods, given the same establishment costs. Thus, when the second equity criterion is met, the tax becomes biased against land uses with long rotations. These results indicate that none of the taxes modeled can meet the two equity criteria simultaneously. Even so, among forest investments, the current federal income tax with basis indexing is the most desirable because it is least likely to distort allocation of land to forestry.
Regional utilization of reusable pallets by the grocery and related products industry
Anderson, Robert Bruce (Virginia Polytechnic Institute and State University, 1988)
Since 1960, pallet production has quadrupled, increasing the pallet industry's use of hardwood lumber from 14 percent to almost 50 percent of total hardwood lumber production. Part of this growth can be attributed to the grocery and related products industry, which should continue as a major growth area for pallet usage over the next decade. The general objective of this study is to provide information that can be used to understand the long-term potential and long-term trends in the grocery pallet market which relate to future regional timber demands by the pallet industry. Specific objectives are: (A) Provide information on current use of grocery pallets in the grocery distribution industry; (B) Provide theoretical framework for future analysis of the regional demand for grocery pallets; and (C) Provide information on demand for regional timber resources resulting from grocery pallet production within specified regions. Models are presented representing demand and supply in the grocery and related products and grocery pallet markets. In the grocery pallet model, demand for new grocery pallets is expressed as an 'excess demand' where demand for new grocery pallets equals the difference between aggregate supply of pallets to grocery distribution and available inventory of grocery pallets in the system. Inventory of grocery pallets in grocery distribution is expressed as a function of dollar volume of retail sales, based on application of a stock adjustment model for durable inputs. Consumption of grocery pallets by the grocery distribution industry is shown to be an important part in overall new pallet production even though the pallet used, 48"x40", only constitutes about 11 percent of total new pallet production in 1986. Estimates of national consumption of new grocery pallets in 1986 are broken down into regional estimates of new pallet consumption. Volume of wood raw material used in 1986 for production of grocery pallets is estimated to exceed 838 million board foot of wood raw material, or potentially 18 percent of total hardwood raw material consumed in production of all types of pallets. National trends effecting wood use in grocery distribution are considered. Specific regional trends effecting wood raw material use are not identified.
Timber supply in dynamic general equilibrium
McDill, Marc Eric (Virginia Polytechnic Institute and State University, 1989)
Given the neoclassical assumptions of optimizing economic agents, perfect information, perfect competition, and productive efficiency, timber supply is a dynamic process. Different discrete-time dynamic timber supply models and their solution methods are compared and their common elements derived. A continuous-time model is derived, but not solved. The discrete-time timber supply model is then incorporated into a dynamic multi-sector model and a dynamic general equilibrium model. In the multi-sector model, all household's utility functions are aggregated into a single community utility function which is maximized subject to the technology of the economy. The technology for the forest sector is the same as in the discrete-time dynamic timber supply models. Wood is treated as an intermediate input into the production of consumer goods. The technology of the consumer goods sectors is based on the technology used in computable general equilibrium models. The optimal steady state problem for this model is discussed, and the solution for an example problem is presented. Disaggregating the utility function is necessary for modeling true general equilibrium. This greatly complicates the problem of Ending numerical solutions, but enriches the model considerably. The formulation of the general equilibrium model as an optimization problem is described, but proved rather difficult to solve. The optimal steady state problem can be solved using an algorithm developed by Scarf (1967) for finding fixed points of continuous functions. The fixed-point approach provides a reliable solution method and appears to have more potential for modeling departures from perfect competition than the optimization approach. The equivalence of the two approaches is discussed.
A timber supply model and analysis for southwest Virginia
Clements, Stephen E. (Virginia Polytechnic Institute and State University, 1987)
A model was developed to estimate the economic stock supply of primary wood products. Two hardwood products were recognized: logs and bolts. The supply model was used to evaluate the impacts of shifting primary product demands and increasing supply costs on delivered prices and quantities in southwest Virginia. Homogeneous supply response cells, identified from Forest Service forest survey data, were used to generate log and bolt supplies. Response cells define blocks of forest land with similar biologic, physiographic, and landowner characteristics. Yield equations estimate the volume of logs and bolts available. Harvesting and hauling costs depend on a response cell's physiographic characteristics. Stumpage owners set reservation price as a function of expected stumpage prices, future timber yields, and an alternative rate of return. Recovery cost per unit in a response cell equals the sum of harvesting and hauling costs and reservation price. The quantities of logs and bolts supplied are determined by comparing harvest revenues to recovery costs. If revenues are greater than or equal to costs in a particular response cell, then timber is harvested The demands for logs and bolts are derived from the demand for manufactured products. Log and bolt demand equations in the model were statistically estimated. For each time period, the model determines the delivered log and bolt prices which equate the quantities of logs and bolts supplied to the quantities demanded. The solution technique is iterative. The quantities demanded and supplied of logs and bolts are determined for the given delivered prices. If quantities supplied do not equal the quantities demanded, then delivered prices are adjusted, and the quantities are recalculated. Primary product supplies in southwest Virginia are price elastic because of extensive hardwood resources and relatively constant recovery costs. Expansions in primary product demands expected over the next 15 years should have little direct impact on delivered prices. Delivered prices, however, will be sensitive to production costs. These costs will rise if factor input prices, such as fuel prices, wage rates, or machinery costs, increase.
Virginia’s Forest Products Industry
Wisdom, Harold W.; Hudspeth, Timothy G. (Virginia Tech. Division of Forestry and Wildlife Resources, 1978)
This report presents the results of an economic analysis of Virginia's forest products industry. The report is based on a special survey of wood use by the state's primary wood-using industries in 1976.
Wood as an energy source in the Kraft pulp-paper industry of the southeastern United States
Liebenow, William Michael (Virginia Polytechnic Institute and State University, 1982)
This is a study in the economics of deriving energy from wood. Its objective is to provide guides to industry managers that will enable them to better assess wood's fuel potential. It is written with this business audience in mind. An introductory section describes the "energy crisis" as nothing more than a radical shift in relative prices, requiring that a significant investment be made in capital assets designed to economize on high-cost, fluid fuels. A second discusses wood fuel supply within the context of the total timber supply. Heightened demand for fuelwood unleashes both opposing and complementary forces that affect the supply of wood fiber. These are described. A continuum is developed to show how the marginal cost of deriving effective energy from wood changes depending on the level of subsidy provided by other joint-products of the log. One chapter is devoted to a comparison between wood and fossil fuels on the basis of caloric value, combustion efficiency, environmental impact, and fuel form conversion. Final sections set forth guides for profit-maximizing fuel selection: • A case study of Continental's Hopewell, Virginia, Kraft linerboard mill is used to develop a linear programming model that selects the optimal wood-coal mix for a combination boiler. • A short-run analysis section discusses wood sourcing and allocation between energy and fiber uses. Four methods are described: Least-Cost Sourcing, Conversion Surplus Valuation, Relative Fiber Valuation, and Return-to-Capital Valuation. The last approach is shown to be superior. • Finally, a long-run analysis section looks at risk in capital investment for energy assets, and defines it in terms of semi-variance. A simulation approach is described that allows one to calculate an index of risk for various fuel system investment alternatives.

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