Archive Document Historic, Do not assume content reflects current scientific knowledge, policies, or practices. 0*- UnitedStates Recycling and Long-Range Departmentof Agriculture limber Outlook ForestService Rocky Mountain Forestand Range Peter J. Ince ExperimentStation Fort Collins Colorado 80526 73 y General Technical Report RM-242 -< Acknowledgments Iamindebted toco-authorsoftheNAPAPModel, Adams,UniversityofMontana,andRichardHaynesof including Dr. Dali Zhang, Research Associate at theUSDAForestServicePacificNorthwestExperiment University of Wisconsin-Madison (UW), Romain Station,Portland,Oregon,workedonestimatesofU.S. Jacques, Economist at the Policy and Economics Di- roundwoodpulpwoodsupplyfunctions,andprovided rectorate (PED) of Forestry Canada, and Professor projectedpulpwoodsupplygrowthrelationshipsfrom Joseph Buongiorno of UW-Madison. I am further theTAMM/ATLAS model. indebtedtoDr. ZhangandProfessorBuongiornofor I am indebted also to the following for their sup- their primary roles in development and co-author- porting roles and contributions at various stages of shipofPELPSIII (version3ofthePrice-Endogenous this study or in development of the NAPAP Model: Linear Programming System for economic model- DavidDarroftheUSDAForestServiceFIERRstaffin ing, which we used in development of the NAPAP WashingtonDC,coordinatedandmanagedthework Model). of RPA Issue Analysts for the 1993 RPA Update; I am indebted also to the following codevelopers Lloyd Davidson of FPL, helped produce the charts oftheNAPAPModel fortheirsubstantive contribu- showninthisreport;JoanneT. AligofFPLcompiled tions: DonG. Roberts, PED, helped planand initiate extensivebackgroundinformationonlegislativede- research which led to development of the NAPAP velopmentsinrecycling;H.FredKaiseroftheUSDA Model;IreneDurbak,ResearchForester,FPL,worked Forest Service FIERR staff in Washington DC, Will- onestimation ofU.S. trade relationships, along with iam Lange, FPL, and Doug Ketcheson and Dave J. graduate student Togu Manurung of UW; Susan Boulter, PED,ForestryCanada, Ottawa,helped pro- Phelps, PED, developed a system for tabulating vide some of the arrangements and funding which NAPAP Model input data and output information; facilitatedtheinternationalresearchstudyleadingto Dr. Hsien-Chi Lu (formerly UW graduate student) developmentoftheNAPAPModel;formergraduate worked on estimation of U.S. demand functions, students at the University ofWisconsin-Madison, J. along with Professor Joseph Buongiorno; Ken Skog Keith Gilless (now Professor at the University of and James Howard, FPL, worked on estimation of California-Berkeley), and Patrice Calmels who , U.S. recovered paper supply functions; Robert G. helped develop previous versions of the price-en- Prins and HarryJaaskelainen, PED, along with Don dogenous linear programming system (PELPS and G. Robertsworked onestimationofrecovered paper PELPS II). Others who helped in compiling data or supply functions for Canada; Don G. Roberts and developing estimates for the NAPAP Model at FPL Robert G. Prins also worked on estimation ofCana- includedDeniseIngram,DenaLuze,JillBickelhaupt, dian roundwood pulpwood supply functions; Bar- DietrichEarnhardt,MikeMolter,SujataGhosh,Mary bara Baker, PED, worked on demand elasticities for Reuter, Ted King, Catherine Ausloos, and John pulpandpaperproductsinCanada;ProfessorDarius Hagerty. This publication was printed on recycled paper. USDA Forest Service February 1994 General Technical Report RM-242 Recycling and Long-Range Timber Outlook Peter J. Ince, Research Forester Forest Products Laboratory1 Contents Page Summary 1 Emergence ofthe Issue 2 Landfill Crisis and Waste Management Dilemma 2 Relevance to RPA Assessment 3 Selection and Definition ofthe Issue 4 Approach and Methods 5 Basic Assumptions 5 Methods 6 Other Studies 7 NAPAP Model 8 Methodology ofNAPAPModel 9 Results 10 Paper & Board Consumption 11 Per Capita Paper & Board Consumption 11 Gross WastepaperDisposal Burden 12 Exports of Paper and Board 13 Imports ofPaperand Board 13 Exports ofWoodpulp 14 Imports ofWoodpulp 14 Production of Paperand Board 14 Production ofWoodpulp 15 Total Pulpwood Supply 15 Softwood Pulpwood Supply 15 Hardwood Pulpwood Supply 16 Pulpwood Residues 16 Southern Softwood Pulpwood Price Index 16 Southern Hardwood Pulpwood Price Index 17 Softwood LumberProduction 17 National ForestTimberHarvest 18 U.S. Private ForestTimber Harvest 18 U.S. Timber Harvest (All Owners) 18 Southern Softwood Sawtimber Stumpage Index 18 Conclusions 19 Implications 20 References 22 Recycling and Long-Range Timber Outlook Peter J. Inee Summary andpaperboardwillcontinuetoincrease,withgrowth in fiber demands matched by growth in domestic This report updates the Forest Service analysis of fiber supplies. long-rangetrendsinpaperrecyclingandimpactson Although increased recycling will extend fiber thetimberoutlookintheUnitedStates.Twoupdated supply, results indicate that the United States still scenarios are presented, a "base" scenario and a faces seriousfuturesupplyproblemsforsawtimber. "high recycling/waste reduction" scenario. Projec- Inthisupdated analysis, future National Foresttim- tionsextendfivedecadesintothefuture.2Inthebase ber harvest levels are assumed to decline (to levels scenario, rapid increases are projected in U.S. paper much lower than assumed in the 1989 Assessment). recyclingratesinthe1990s,followedbymoregradual Other assumptions updated since the 1989 Assess- increases in subsequent decades. Results are com- mentincludehigherprojecteddemandforsoftwood pared to the earlier 1989 RPA Assessment, which lumber and plywood in the United States, lower assumed much slower growth in recycling rates. Canadian lumber production, lower private indus- Increased paper recycling affects timber markets by trial sawtimber harvests in the U.S. West, and vari- extendingtimberresourcesandexpandingfibersup- ousrevisionstotimbergrowthassumptions,particu- ply. Roundwood pulpwood demand is projected to larly in the U.S. South. Consequently, growth in increase at a more modest rate than projected in the domesticsawtimbersupplyisnotexpectedtomatch 1989Assessment,whilepulpwoodsuppliesincrease growth in sawtimber demand. Softwood sawtimber (particularlyforsoftwoods).Consequently,realprices prices in the United States are projected to increase for delivered Southern pulpwood are projected to substantiallyinthedecadesahead,despiteincreased remain relatively stable for softwoods, and to in- paper recycling. Real stumpage prices for softwood creasegraduallyforhardwoods.Thebalanceoftrade sawtimber in the South for example are projected to isprojectedtoswingstronglyinfavorofU.S. exports nearly doublebetween 1990 and 2020; and southern for pulp, paper and paperboard. In general, projec- sawtimber prices are projected to be higher by the tions indicate that U.S. production of pulp, paper, year 2000 than projected in the 1989 Assessment. However, increased recycling will help ameliorate 2Projections shown in this report are the result of long-range timber price increases somewhat. In the longer term economic modeling based on economic supply and demand (2010andbeyond),sawtimberpricesareprojectedto theory. Theprojectionsareintendedonlytoprovideprofessional opinion about directional trends of the future. The projections be lower than projected in the 1989 Assessment, should not be viewed as official or scientific endorsement of partly because of increased recycling. specific outcomes or events. They do not represent outcomes which are certain to occur in the future. Ongoing changes in In the alternative "high recycling/waste reduc- markets and technology will certainly render these projections tion" scenario, much more rapid increases in recy- obsolete,andreasonablevariationindataandassumptionscan cling and lower future per capita paper and paper- lead to a wide range ofprojected future outcomes apart from projections shown in this report. Projections shown in this report boardconsumptionlevelsareprojected.Roundwood were derivedfrom the draftNAPAPModelBasescenario results pulpwood consumption and pulpwood prices are ddreavfetlNoApPeAdPinMMoadreclh,re1su9l9t3s(fionrc"lhuidgihngreTcAycMlMinrgu/nwLaRst1e26r)e,duacntdiotnh,e" projected to be substantially lower than in the base whichweredevelopedinJune, 1993(includingTAMMrunLR 130). case. However, softwood sawtimber prices still are Draftprojections shown in this report will vary slightly from final projectedtoincreaseinthedecadesahead,atasome- rUepsudlatst,ewhreipcohrtw.illbepublishedinthe 1993RPA TimberAssessment whatslowerrateofincreasethaninthebasescenario. 1 Emergence of the Issue Peopleunderstand thatpaperrecyclingcan "save trees;" but, the precise impactontimber supply and demandiscomplicatedbyeconomicbehaviorandby other ongoing adjustments to timber supply and demand. Inasimplisticsense,useofrecycledfiberin papermaking directly avoids harvesting of trees for pulpwood,tosomeextent.However,othereconomic and behavioral adjustments complicate the issue. Reducedpulpwooddemandwillextendtimbersup- Total Weight = 195.7 Million Tons plies, making timber harvesting more economically Figure 2.—Estimatesproportionsofmaterialsgenerated in MSW, attractive than it would be otherwise. Trees which 1990 (U.S. EPA). are"saved"byrecyclingarelikelytobeharvestedfor end uses other than papermaking. Therefore, in- creased recycling will tend to favor greater overall Landfill Crisis and Waste Management consumption of forest products in domestic and Dilemma overseas markets. Otheradjustments to timber sup- ply and demand, such as increased forest preserva- In industrialized countries ofNorthAmerica, Eu- tion, also will affect the long-range timber outlook. rope,andEastAsia,thelatterhalfofthe20thcentury Fundamentally, the issue concerns the short-run has been characterized by sustained economic market allocation of wood and fiber resources and growth, rapid expansion of consumer goods mar- thelong-runallocationofland,technology,andcapi- kets,andincreasedurbanization.IntheUnitedStates, tal resources to the forest products sector. The issue forexample,agrowingandmoreurbanizedeconomy has emerged because of a landfill crisis and waste consumedpaperandpaperboardproductsinsteadily management dilemma in the United States, which increasingvolumes,risingfrom24millionshorttons hasprecipitateda substantialincreaseinpaperrecy- annually in 1949, to nearly 87 million tons in 1990 cling. (API 1992). Although organized means of trash col- lectionand disposalwereprovided inindustrialized countries throughout this period, the approach to wastemanagementevolved.Insomeinstances,waste disposalcreated environmentaland economicprob- lems. Groundwater contamination and air quality are among the more significant environmental and humanhealthconcernsassociatedwithlandfillsand waste incineration in the United States (EPA 1989, OTA 1988; 1989). Increasing regulation, negative impactson propertyvalues,and decliningavailabil- ity of waste disposal sites have contributed to in- creasing costs for waste disposal. The volumes of municipal solid waste (MSW) generated in the United States have increased and are projected to increase substantially in the years ahead.Figure 1 showshistoricalandprojectedtrends MSW inwastematerialsgeneratedannuallyin (EPA 1960 1970 1980 1988 2000 2010 1990).Itwasestimatedthatin1990,37.5%(byweight) Year ofallMSWgenerated intheUnitedStateswaspaper 0Paper Glass/Metal SFood/Yard Mother Plastics and paperboard. Figure 2 shows estimated propor- MSW tions of materials generated in (EPA 1992). Figureg1e.n—eHriasttoerdicaalnnaunadllpyrionjeMcStWe,dt1r9e6n0d-s20in10wa(sU.tSe.mEaPeA)r.ials EPA has projected that the amount of MSW gener- 2 ated in theUnited Stateswillexceed 220 milliontons 30 by the year 2010, without additional source reduc- tion(EPA 1992). Withoutsignificantchangesinrecy- cling or consumption patterns, paper and paper- board would remainthelargestsinglecomponentof MSW in the United States. Since the mid-1980s, there has been a significant and continuous growth in paper recycling rates in the United States. In economic terms, the increasein paperrecyclingratessincethemid-1980swasprima- rily an economic response by the paper industry to increased supplies ofpaper collected and recovered for recycling. Recovery of paper for recycling in- 1952 1962 1970 1976 1986 1990 2000 2010 2020 2030 2040 creased in recent years because of widespread ex- Year pansion of paper collection and sorting programs E2!sawlogs GVeneer logs ESPulpwood IMisc. products ^Fuelwood (e.g. community-based curbside collection, sorting, and office wastepaper collection). Such programs Figure 3.—Roundwood consumption in the United States, speci- fied years 1952-1986, with 1989 RPA base projections of de- were directly or indirectly a response to long-term mandto2040. environmental, economic, and human health prob- lems associated with landfills and waste incinera- follows a much longer tradition of federal timber tion, and increasingwaste disposalcosts. Increasing outlook studies, datingback to the late 19th century disposalcostshaveledtoexpansionofcollectionand (forbibliographyofsuchstudies,seePrefacetoUSDA sortingprograms,which,inturn,haveledtocheaper Forest Service 1982). The most recent RPA Assess- and more abundant supplies of recovered paper, ment report was completed in 1989 (USDA Forest providing the economic incentive for industrial ex- Service1989a),accompaniedbypublicationofamore pansion of paper recycling. Thus, the landfill crisis detailed long-range analysis of the timber situation and solid wastemanagementdilemma haveprecipi- in the United States (Haynes 1990). This report was tated the recent departure from historical trends in developed in support of the 1993 RPA Assessment paper recycling. Update (1993 Update). The RPA Assessment and interim updates provide a factual and analytical Relevance to RPA Assessment basis for the RPA Program of the USDA Forest Ser- vice, a program of recommended agency activities The Forest and Rangeland Renewable Resources which is revised and submitted to Congress every 5 Planning Act of 1974 (RPA), the National Forest years under the provisions of RPA. Management Act of 1976 (NFMA), and the Forest Lookingatdataandprojectionsfromthe1989RPA and Rangeland Renewable Resources Research Act Assessment (Haynes 1990), it was apparent that de- of 1978 require the USDA Forest Service to develop mand for timber had grown substantially in recent comprehensive long-range assessments of supply decades, and was expected to grow substantially in and demand fortimberand otherforestresources in the future. Figure 3 shows historical data on timber theUnited States. Thedecennial Assessmentreports consumptionintheUnitedStates,bytimberproduct and their interim updates include detailed analyses category, since 1952, along with 1989 RPA Base pro- ofthe prospective timber supplyand demand situa- jectionstotheyear2040. Itcould be noted, however, tion in the United States. The reports include long- that the 1989 RPA Base projections assumed a very range projections of timber market trends (regional conservative trend in paper recycling rates. Figure 4 supply,demandandprices),forestproductdemand, shows historical data on timber demand from U.S. domestic production, and technological changes in forest lands, with imports and exports, along with major forest product sectors of the U.S. economy 1989 RPA Base projections to the year 2040. Of ap- (including the pulp and paper sector). RPA Assess- proximately 500 million cubic meters ofannual tim- mentreportshavebeenpreparedsincethe1970s.The ber harvest from timberland in the United States, in timber analysis component of the RPA Assessment the late 1980s, approximately one-fourth was pulp- 3 wood supplieddirectlytopulpmills. Inaddition,by thelate1980s,timberharvestrepresentedonlyabout 60% of total pulpwood input to pulp mills in the UnitedStates;about40% ofpulpwoodwasobtained indirectlyas wood residues (wood chips) from saw- mills and veneer mills. Therefore, total pulpwood consumption in the United States, including timber harvest and mill residues, amounted to more than 200 million cubic meters annually, by the late 1980s, or more than 40% of the timber supplied from U.S. timberlands. Inthe 1989RPABasecase,thispercent- age was projected to grow to more than 50% in the decades ahead. Thus, in the 1989 RPA Assessment report, projected growth in pulpwood consumption 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 was a major element in projections of substantially Year increased timber consumption in the United States. Although net annual growth and inventory oftim- Figure5.—U.S. recyclable paperutilization rate historicaltrend ber growing stock have been increasing steadily in (API). recentdecades,andalthoughtimbersupplyisexpected toincreaseinthefuture,the1989RPAAssessmentBase Selection and Definition of the Issue projections showed that overall growth in timber de- mand would generally exceed growth in timber sup- The 1993 Update was intended to reflect analysis ply.Thisresultedinprojectedincreasesintimberprices, of important issues currently related to long-range particularly increases in softwood timber stumpage forestresourcetrends,and particularlyissueswhich prices in the U.S. West and U.S. South (Haynes 1990). haveremainedimportantsincethe1989Assessment. Thisgeneralassessmentofthefuture,thattimberprices Certainly, trends in paper recycling have remained would increase substantially over the long term, was an important issue, given the significant upward not dissimilar to conclusions of other recent timber trend in paper recycling that is now apparent. Fig- analysis studies (USDA Forest Service 1988, USDA ure 5showsthehistoricaltrendintheU.S.recyclable ForestService 1982). paper utilization rate since 1970 (API 1992). The recyclable paper utilization rate is the ratio of the tonnage of recyclable paper used as fiber input in domestic paper and paperboard mills to total ton- nage of paper and paperboard produced. Figure 6 shows the historical trend in U.S. recyclable paper recovery rate for the same period (API 1992). The recyclable paper recovery rate is the ratio of the tonnage of recyclable paper recovered for both do- mesticuseandforexporttothetotaltonnageofpaper and paperboard consumed in the U.S. economy. A substantial historical increase in recycling rates be- gan in the mid-1980s (figs. 5 and 6). Also, by 1992, U.S. paper recycling rates actually reached levels which were not forecast to occur in the 1989 RPA 1952 1962 1970 1976 1986 1990 2000 2010 2020 2030 2040 Base projections until the next century. Thus, the Year Forest Service recognized that scenarios such as the IExports DImports ESIDemand on Forest Land 1989 RPA Base should not be viewed in isolation fromalternativescenarioswhichshowmorerealistic Figure 4.—Timber demand showing exports, imports, and de- trends in paper recycling. mandonforestlandintheUnitedStates,specifiedyears 1952- 1986, with 1989 RPA base projectionsofdemandto 2040. 4