Japanese Forest Sector Modeling

Abstract

In this paper we present a spatial and temporal market equilibrium model for Japanese lumber markets in conjunction with a Japanese lumber import model. The proposed model is based on the Samuelson type market equilibrium model with applying a linear function to lumber demand and supply functions in each region as well as a lumber import function. These functions are derived by using price elasticity of lumber demand and supply, which is estimated by using annual regional lumber production and consumption data from 1974 to 1995. As for the import model, data from 1970 to 1996 are used to estimate the price elasticity. Japanese lumber markets are divided into eight regional markets, i.e., Tohoku, Kanto, Hokuriku, Chubu, Kinki, Chugoku, Shikoku, and Kyushu. We consider three types of lumber in the model; Japanese domestic lumber, lumber processed in Japan from logs imported from the United States, and imported lumber. We investigate possibilities of increasing lumber production in Japan using different assumptions in the model specification and market situation. Our simulation analysis indicates that reduction of U.S. log imports does not have much influence on domestic lumber production, but instead accelerates lumber imports to Japan, which can be observed mainly in Kanto.