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293chAPTeR 12. Employment and Income Trends and Projections for Forest-Based Sectors in the U.S. South
KarenL.Abt1
key FiNDiNGS
•Thesouthernloggingsectorisexpectedtoexperiencesmallincreasesinbothindustryoutput(3percent)andjobs(2percent)from2008to2018.Increaseddemandfrombioenergyisexpectedtocounteractincreasingtrendstowardmechanizationandreduceddemandfromsometraditionalwood-usingindustries.
• Southernwoodproductsmanufacturingisexpectedtoincreaseinindustryoutput(2.2percent)inconjunctionwiththehousingrecoveryafterthe2007–09recession.Technicalchangeisexpectedtocontinue—withcapitalsubstitutingforlabor—leadingtocontinueddeclinesinjobsthrough2018(8percent).
•Thesouthernpapermanufacturingsectorisexpectedtocontinuecontracting,withindustryoutputdecliningby17percentthrough2018.Outputdeclinesandcontinuedtechnicalchangeareexpectedtoreducejobsby26percentfrom2008to2018.
• Forest-basedrecreationisexpectedtoincreasefollowingthe2007–09recession,butatlowerratesthanoveralltravelandtourism.Increasesinoutputmaybelimitedbecauseforest-basedrecreationpercapitaisnotexpectedtoincreaseatthesamerateasothertravelandtourism.Inaddition,technicalchangeisexpectedtocontinuetoreducelabordemandforthesamelevelofoutput.
•BioenergydemandsresultingfromStateandFederalpoliciesareexpectedtoleadtoincreasesinloggingsectorjobsandoutput.Ifcompetitionoccursbetweenbioenergydemandsandtraditionalwoodproductsdemands,additionallossesinjobsandoutputinthewoodproductsandpapermanufacturingsectorswouldbeexpected.Outputandemploymentgainsfrombioenergydevelopmentandproductionwouldbeoffsetbylossesinconventionalenergy,includingmining,drilling,transport,andfuelandelectricitygenerationanddistribution.TheoveralleffectsonoutputandemploymentintheSouthareexpectedtobesmall.
1KarenL.AbtisaResearchEconomistattheForestEconomicsandPolicyResearchWorkUnit,SouthernResearchStation,U.S.DepartmentofAgricultureForestService,ResearchTrianglePark,NC27709.
iNTRoDucTioN
Southernforestsareusedforrecreation,providewoodinputstomanufacturing,createscenery,andenhancethequalityoflife.Inadditiontoprovidingjobsandincometothelocalandregionaleconomy,forestsarenowconsideredapotentialsourceofwoodybiomassforbioenergy.Thischapteraddressestheshort-termfutureoutputandjobsinforest-usingsectorsofthesoutherneconomy.Specificsectorsaddressedincludeforestryandlogging,woodproductsmanufacturing,papermanufacturing,forest-basedrecreation,andthenewbioenergysectors.
Economistsrepresenttheregionaleconomythroughproductionfunctions.Aproductionfunctionisastylizedmodelthatexpressesindustryorbusinessoutputs(typicallymeasuredindollars)asafunctionoftheinputsneededtogeneratetheoutputs.Forexample,agenericproductionfunctionwouldrepresentoutputasafunctionofcapital,labor,energy,materials(suchaswood),andotherinputs.Overtime,weexpectthisproductionfunctiontochangeastechnologyreducestheamountofinputsneededtoproducethesamelevelofoutputbysubstitutingcapitalforlabor,energy,andotherinputs.
Assumingthatcompaniesareprofitmaximizingandrisk-neutral,theoptimaloutputlevelandtheoptimalcombinationofinputsneededtoachieveitwillbedrivenbythepricesoftheinputsandoutputs.Wetypicallyexpecttheinputstobecomplements(anincreaseinoneinputrequiresanincreaseintheother)orsubstitutes(anincreaseinoneinputleadstoadecreaseintheother).Changesininputuselevelscanbetheresultofchangesintheoutputlevelorchangesininputpriceorquality.Thus,anindustryorbusinesscandecreaseitsdemandforlabor(jobs)becauseofdecreaseddemandforitsoutputs,orbecausecapitaloranotherinputissubstitutingforlaborintheproductionfunction.
Aconundrumofeconomicanalysisisthatapositiveoutcomeinoneareaislikelyoffsetbyanegativeoutcomeelsewhere.Forexample,increasingwagesisusuallyperceivedasapositivebecauseitleadstoahigherstandardoflivingforworkers,butitalsoleadstoincreasedlaborcosts,which
Chapter 12. employment and income Trends and Projections for Forest-Based Sectors in the u.S. South
294The Southern Forest Futures Project
willresultinsubstitutingcapitalforlaborintheproductionfunction.Theresultisalossofjobs,whichistypicallyseenasanegativeoutcome.Similarly,gainsinonesector(suchaslogging)arelikelyoffsetbylossesinadifferentsector(suchascoalmining);andgainsinonegeographicarea(suchastheSouth)maybeoffsetbylossesinotherregions(suchastheNorthernAppalachians).Theseoutcomesillustratethatthedefinitionofsectors,inputs,andareasofinterestarelikelytoinfluencetheoutcomeofanyeconomicanalysisofaregion’seconomy,whichshouldbekeptinmindwhilereadingthefollowingassessment.
Throughoutthischapter,weusesomespecificeconomicandmodelingterms.Theyaredefinedbelow:
Recession:aneconomictermimplying,generally,adeclineineconomicactivitythatisbetweenapeakandtroughofeconomicactivity.TheNationalBureauofEconomicResearchistheacceptedarbiterofwhenrecessionsbeginandend(seehttp://www.nber.org/cycles/recessions.html).TherecessionreferredtointhischapterbeganinDecember2007andcontinueduntilJuneof2009.
Technical change: Technicalchangeisaneconomictermrepresentinganychangeintherelationshipbetweeninputstoaproductionprocessandoutputsfromaproductionprocess.Thisisoftenanimprovementincapitaluse,leadingtoareductioninlaboruse,butcanalsoresultfromadministrativeorpolicychanges.
Jobs (also employment):Thesearenotfull-timeequivalents,andsorepresentanycontinuousemployer-employeerelationshipforwagesandsalary,whetherfull-orpart-time.
Output (also total industry output): Outputisaneconomictermrepresentingthetotaldollarvalueofafirmorsectororeconomy.Thisvalue“doublecounts”thecontributionofasectorwhenaddingupthetotalsforaneconomy—thevalueofalogwouldbecountedintheoutputoftheloggingsector,and,forexample,intheoutputofthesawmillsector.Whenaddingupthesectorvaluesacrossaneconomy,thetotalvalueaddedshouldbeusedinplaceofoutput;howeverinthischapterweuseoutputbecausethemodelsandforecastsweredevelopedforoutputandnotfortotalvalueadded.
Gross regional product (also gross domestic product): aneconomictermrepresentingthetotalvalueoftheproductionofgoodsandservicesforaregion(orStateorcountry).
Total value added: aneconomictermthatnetsoutthecostofinputs(suchaslogs)thatarecountedasanotherfirm’soutputsandisnearlyequivalenttogrossdomestic(orregional)product(indirecttaxesareexcluded).Othercomponentsoftotalvalueaddedincludeproprietor’sincomeandproperty-typeincome.
Income: represents,inthischapter,wageandsalaryincomefromajob.Wageandsalaryincomeisalargecomponentoftotalvalueadded,andthusisalargecomponentofgrossregionalproduct.
Forestry and logging: asectorthatincludesboththegrowingandmanagementofforests[forestryispartofNorthAmericanIndustryClassificationSystem(NAICS)sector115]andtheharvestingandtransportationoftimber(NAICS113).
Forest-based recreation: asectorthatrepresentsallexpendituresmadetoparticipateinforest-basedrecreation,includinghiking,hunting,wintersports,watersports,fishing,naturestudyandotherrecreationactivitiestakingplaceinforests.ThissectorisnotdefinedseparatelyinNAICS,butcouldincludeportionsofothersectorsincludingtransportation(NAICS48),accommodations(NAICS721),eatinganddrinkingplaces(NAICS722),recreationandentertainment(NAICS713)aswellaspartsofothersectors.
Bioenergy: asectorthatrepresentscurrent(orpotential)usesofwoodtoproduceenergy(pellets,liquidfuels,andelectricity).ThissectorisnotdefinedseparatelyinNAICS,butcouldincludeportionsofmiscellaneouswoodproducts(NAICS321999),electricitygeneration(NAICS237130)andethanolsectors(NAICS325193).
Wood products manufacturing: asectorthatincludesprimarysawmillsaswellasmanufacturersofveneerand/orplywood,engineeredwoodmembers,andreconstitutedwoodproducts(NAICS321).Thesecompaniesmanufactureand/orusesolidwoodproductssuchaslumber,millwork,pallets,mobilehomes,andtrusses.
Paper manufacturing: asector(NAICS322)thatincludesfirmsthatmakepulp,paperand/orconvertedpaperproducts.
Input-output models: modelsusedtorepresentstatic,detailedproductionrelationshipsbetweeninputsandoutputs,andjobsandincome.
Computable general equilibrium models: modelsusedtorepresentchangesinaneconomyusingestimatedorassumedequationsandparameters.
meThoDS
Toaddressthefutureofjobs,income,andcontributionsofforest-usingsectorstotheregionalorlocaleconomy,wefirstevaluatedhistoricaltrendsandcurrentconditionsintheforestryandlogging,woodproducts,andpapermanufacturingsectors,aswellasforest-basedrecreationandfuturebioenergysectors.Wethendevelopedprojections,totheextentpossiblegiventhedatalimitations,forforest-usingsectors.
295chAPTeR 12. Employment and Income Trends and Projections for Forest-Based Sectors in the U.S. South
Theforest-basedrecreationandbioenergysectorshaveinadequatedataand/oranalysesatthenationallevelandfortheSouththatlimitsourabilitytoprojectthesesectors.Forest-basedrecreationisnotspecificallytrackedinthenationaleconomicaccounts,andeventhedataavailablenationallyhavenotbeensubsetfortheSouth,limitingourabilitytoprovideSouthwidetrends.Thebioenergysector(distinctfromby-productsofwoodproductsandpapermanufacturing)isfairlynewanddoesnothaveseparatedataforhistoricalanalysis.
Forecastsforthelogging,woodproductsmanufacturing,andpapermanufacturingsectorsweredevelopedforasingledecade,usingtrendsinthesoutherncomponentofeachsectortodownscalenationalforecasts.ThesenationalandsoutherntrendsweredevelopedfromtheIMPLAN(MicroImplanGroup,Inc.2010)database(percentofeachsectors’outputsthatwerefromtheSouth)andfromthe2007ResourcesPlanningActdatabase(percentofeachsectors’inputsthatwerefromtheSouth).Forecastsofeconomicactivityatthesectorlevelwerenotavailablebeyond2018.
ThenationalforecastsweredevelopedbytheBureauofLaborStatistics,DepartmentofLaborusingmethodsoutlinedinchapter13oftheBLSHandbookofMethods(U.S.DepartmentofLaborBLS,2011).Theseforecastsaredevelopedeverytwoyears,fora10-yearforecastperiod.Therearesixseparatemodelingcomponents,eachofwhichbuildsonthepreviousoutputs.Thesesixcomponentsare:
1.ForecastofLaborSupply:developedfromforecastsoflaborparticipationratesandpopulation.
2. ForecastofAggregateEconomicGrowth:BLScontractswithMacroeconomicAdvisers,LLCtodeveloptheseforecasts,usingtheforecastoflaborsupplyasaninput.
3. ForecastofCommodityFinalDemand:thismodelingcomponentdisaggregatestheeconomicgrowthintogrowthinthecomponentsoffinaldemand(personalconsumptionexpenditures,grossprivatedomesticinvestment,foreigntrade,andgovernmentdemand)foreachcommodity.
4. ForecastofSectoralIndustryOutputs:usinganinput-outputmodelwithinputsfromaboveandproductionrelationshipsfromtheBureauofEconomicAnalysis,thecommodityfinaldemandsareconvertedintoindustrytotaloutputs.
5. ForecastsofIndustryEmployment:jobsareestimatedasafunctionoftotalindustryoutput,wages,pricesandtime,asasystemofequations.WagesderivedfromtheCurrentEmploymentStatisticsandtheCurrentPopulationSurvey,pricesareadjustedusingforecastinflation,andtimeaccountsforchangesinlaborproductivity.
6. ForecastsofOccupationalEmploymentandJobOpenings:amatrixof300industriesby750occupationsisusedtocalculatehowforecastsofindustryemploymentresultinparticularjobs.
Thenationalforecastsforthetourism-relatedsectorsarealsopresented,asaretheexpectedchangesinjobsandincomethatcouldresultfromthesesectors.Forecastingthebioenergysectoriscomplicatedbecausethetechnologiesareunderdevelopmentandthemarketsarenotwellestablished.Inaddition,thereisconsiderableuncertaintyregardingthepoliciesandtechnologiesthatwilldrivetheindustriesandresultingoutputsandjobs.
DATA SouRceS
DatausedinthisanalysisareprimarilyfromtheU.S.DepartmentofCommerce,BureauofEconomicAnalysis(BEA)(2010),Woods(2009),andtheTravelandTourismSatelliteAccount(GriffithandZemanek2009).Inaddition,datafromIMPLAN(MicroImplanGroup,Inc.2010)andfromthe2007ResourcesPlanningActdatabasewereusedtodownscalethenationallaborforecaststotheSouth.
ReSulTS
Past and current Role of Forest-Based Sectors in the Southern economy
Wood-relatedmanufacturing,includingloggingandforestrycomprisedlessthan1percentofsouthernjobsandemploymentincomein2008(figs.12.1and12.2)(U.S.DepartmentofCommerce2010).Thiswasdownfrom1.2percentin1990(figs.12.3and12.4),andresultedfromboththegrowthoftheentiresoutherneconomyaswellasadeclineinwood-relatedemployment(figs.12.5and12.6).Wood-relatedincome(inconstant2008dollars)increasedfrom1990to2000,butfellbackto1990levelsafter2000,withmostofthevariationcomingfromthewoodproductsandpapermanufacturingsectors(fig.12.6).Wood-relatedmanufacturingcomprised10percentofallsouthernmanufacturingemployment(fig.12.7)and8percentofallsouthernmanufacturingincome(fig.12.8).Thiscomparestofoodmanufacturingwith13percentofemploymentand10percentofincome,andtextilesmanufacturingwith6percentofemploymentand4percentofincome(fig.12.7andfig.12.8).
Ofthethreewood-relatedmanufacturingsectors’employment,woodproductsmanufacturingisthelargestcomponent(47percentofwood-relatedemployment)andforestryandloggingisthesmallest(14percent)(fig.12.9).Thepapermanufacturingsector,however,providesamuchlargerproportionofwood-relatedincome(51percent)
300The Southern Forest Futures Project
reflectingthehigherwagesandmorefull-timeemploymentinthissector(fig.12.10).
Thedirectandtotalcontributionofthewood-relatedmanufacturingsectorswasalsoassessedusingtheIMPLAN(MicroImplanGroup,Inc.2010)input-outputmodel.ThethirteenSouthernStateswereaggregated,andthentheforestryandlogging,woodproductsmanufacturing,andpapermanufacturingsectorswereaggregated.Table12.1showsthedirectcontributionsofthesesectorstosouthernemployment,employeecompensation,wageandsalaryincome,totalvalueadded,andtotalindustryoutputin2009.Table12.2showsthetotalcontributionofwood-relatedmanufacturing,whichisthesumofthedirectcontributionplusthemultipliereffects,foreachsector.Fordetailsaboutthecalculationoftheseresults,seeAbtandothers(2002).UsingtheIMPLANdata,whichisderivedfromdifferentsourcesthantheBEAdata,wefoundthatthedirectcontributionofthewood-relatedmanufacturingsectorswasbetween0.6(employment)to1.4percent(totalindustryoutput)ofthesoutherneconomy.Thetotalcontributionofthesesectorsrangedfrom1.9percent(employment)to2.8percent(totalindustryoutput),withthetotalcontributiontoemployeecompensationandtotalvalueaddedinbetween.
TheU.S.travelandtourismsectorhasincreasedsince1990(fig.12.11)(GriffithandZermanek2009,KernandKocis2007).However,becauseacomparableanalysishasnotbeendonefortheSouthalone,andbecauseforest-basedrecreationcomprisesonlyaportionofthetotaltravelandtourismsector,wecannotdeterminepreciselywhatportionofjobsandincomeinthetourism-relatedsectorscanbeattributedtosouthernforest-basedrecreation.
logging
ConcernsoverashortageofloggershavebeenvoicedintheSouthformorethan50years(Pikl1960,WollfandNolley1977).Morerecently,surveysofloggersindicateincreasesinaverageage,areluctancetoencouragechildrentoenterthefield,andincreasingfinancialconcerns,allofwhichcouldsignalafutureshortageofloggers(BakerandGreene2008;EganandTaggart2004a,2004b;EganandTaggert2007;Luppoldandothers1998).Atthesametime,increasingmechanizationcouldleadtoreducedneedforloggersasmoreoftheworkisaccomplishedbymachinery.
Pastsurveyshaveindicatedthatinsurancewasaprimaryconcernforsustainabilityofloggingcompanies,butrespondentstomorerecentsurveysreportedthatfuelpricesandtimberpricesaremorecriticaltoday(BakerandGreene2008,MoldenhauerandBolding2009).Issuesthatwerenotreportedassignificantbarrierstosustainabilityincludetaxesandregulations(BakerandGreene2008)andtractsize
anddevelopment(Eganandothers2007,MoldenhauerandBolding2009).
Thefutureislikelytobringincreasingmechanizationandthesubstitutionofequipmentforjobsintheloggingsector.Thismechanization,aswellasregulationsandlaws,hasalsoledtoincreasedsafetyandlessstrenuouswork,whichmayservetomakeloggingamoreattractivecareerchoice.However,manycurrentloggersindicatethattheirpreferenceforloggingworkisderivedinpartfromthehard,physicalnatureofthework(EganandTaggart2004a,2004b);makingtheworksaferandeasiermightleadtofewer(ordifferent)newentrantsintothefield.
Althoughcurrentloggersreportthatwagesarelow,theydonotviewwageincreasesasapriority.However,economictheorywouldimplythatanincreaseinwageswouldresultinanincreaseinnumbersofloggers.Evenso,theriskynatureofboththeworkandthebusinessmaypreventasufficientnumberofworkersfromchoosingloggingasaprofession.Ifshortagesdooccur,othermarketsolutionsareexpected;forexample,arrangementscouldbemadebetweenwood-usingcompaniesandloggersthatcouldincludelong-termcontracts,immigrantlaborcontracts,loansforequipment,orothersolutions.
Thenationalprojectionshowsaslightincreaseinthenumberofloggingjobsandinoutputfortheloggingindustryin2018(Woods2009).ScalingthistotheSouthshowsincreasesof2percentinjobsand3percentinoutputfor2008to2018,reversingthetrendfrom1998to2008(fig.12.12).Thisincreaseisattributed,inpart,toaslightincreaseintheexpecteduseofwoodforenergy.IncomeperloggingjobintheSouthhasincreasedandnowsurpassesthenationalaverage(fig.12.13).Thisincreaseresultsfromacombinationofbothincreasinghourlywagesandincreasinghoursperjob(morefulltimeemployment).Beyondtheprojection(2018),weexpectthenumberofloggingjobstocorrelatestronglywithchangesinharvestlevels,whilealsocontinuingtorespondtotechnicalchangebydecliningasmechanizationcontinuestoincrease.
Wood Products manufacturing
Thesectorisstronglylinkedtothehousingmarket,andthedeclineinoutputandjobsfrom1998to2008(fig.12.14)reflectsthedeclineinhousingstartsduringthe2007recession(Woods2009).Asthehousingmarketrecovers,outputisexpectedtoriseby2.2percentthrough2018,buttechnicalchangeandachangeintheproductmixisexpectedtocauseemploymenttocontinuedecliningby8percent(fig.12.14).Thesevaluesweredownscaledfromthenationallaborforecasts(Woods2009)byproportioningthenationaltrendstotheSouth’sshareoftotaloutputandemploymentforthissector.
301chAPTeR 12. Employment and Income Trends and Projections for Forest-Based Sectors in the U.S. South
Table 12.1—Direct contributions of three wood-related sectors to employment, compensation, value added, and total industry output of the South in 2009, in millions of 2009 U.S. dollars and by percent of totals for the South
NAicS sector Sector name employment
employee compensation
Total value added
Total industry output
percentmillions
of 2009$ percentmillions
of 2009$ percentmillions
of 2009$ percent
131 Forestry and logging 57,676 0.10 1,454 0.06 3,776 0.09 9,613 0.12
321 Wood products manufacturing 145,936 0.26 6,468 0.27 10,168 0.25 28,065 0.34
322 Paper manufacturing 143,984 0.25 11,440 0.48 23,390 0.57 79,991 0.98
All wood-related manufacturing 347,596 0.61 19,363 0.81 37,333 0.92 117,668 1.44
Table 12.2—Total contribution of three wood-related sectors to employment, compensation, value added, and total industry output of the South in 2009, in millions of 2009 U.S. dollars and by percent of totals for the South
NAicS sector Sector name employment
employee compensation
Total value added
Total industry output
percentmillions
of 2009$ percentmillions
of 2009$ percentmillions
of 2009$ percent
131 Forestry and logging 137,461 0.24 4,104 0.17 9,000 0.22 19,350 0.24
321 Wood products manufacturing 348,001 0.61 15,180 0.63 26,803 0.66 58,474 0.72
322 Paper manufacturing 591,934 1.04 31,995 1.34 63,240 1.55 152,075 1.86
All wood-related manufacturing 1,077,396 1.89 51,279 2.14 99,044 2.43 229,900 2.82
305chAPTeR 12. Employment and Income Trends and Projections for Forest-Based Sectors in the U.S. South
(Woods2009).Anyrecoveryfromtherecessionismaskedbyoveralldeclinesinthissector.DownscalingtheseforecaststotheSouthresultedinprojecteddeclinesof26percentinjobsand14percentinoutput(fig.12.15).ThislargerdeclineinjobsinboththeUnitedStatesandtheSouthinthepapersectorrepresentsexpectationsofcontinuedtechnicalchangeinvolvingthesubstitutionofcapitalforlabor.
Forest-Based Recreation
ForestsintheSouthareusedforavarietyofrecreationalopportunities,rangingfromwhitewaterkayakingtonaturestudy.Forest-basedrecreationisnotrecordedasasingleeconomicsector,butisinsteadpartofseveralsectors,includingtransportation,entertainment,accommodations,sportinggoodsmanufacturing,andeatinganddrinkingplaces.Thisisalsotrueforoveralltravelandtourism,whereexpendituresarerecordedinothersectors,butthenconsolidatedandtrackednationallyasaseparateaccount(GriffithandZemanek2009,KernandKocis2007).Forest-basedrecreationisexpectedtobeonlyapartofthismuchlargertravelandtourismsector.
Inaseparatechapterinthisstudy,Bowkerandothers(2013)developedprojectionsforforest-basedrecreationparticipationbysouthernresidents.Theyconcludedthatpercapitaforest-basedrecreationwouldstayfairlyconstantformostactivities,whiledecliningslightlyforhunting,fishing,andmotorizedoff-roadactivities.Thiscontrastswiththeprojectionsfornationalforests,wherethepercapitarateofrecreationvisitsdeclinesforallactivities.Theirchapteralsoshowsthatnationalforestpercapitarecreationvisitsareexpectedtodeclinemoreforovernightandgeneralvisitsthanfordayusedevelopedvisits.Further,theyconcludethatrecreationpressuresarelikelytoincreaseproportionatelymorenearurbanareas.Aseparatestudyshowsthatexpenditurespervisitperpartyarethreetofourtimeshigherforovernightvisitsthanfordayvisits,andare40to80percenthigherfornon-localvisits(StynesandWhite2006).Theseresults,takentogether,providesome,althoughweak,supportforsomewhatlowerpercapitaexpendituresonforest-basedrecreationintheSouth,resultinginforest-basedrecreationbecomingasmallerpartoftotaltravelandtourismexpendituresinthefuture.Expenditures,andthusoutput,areexpectedtogrow,however,althoughbelowtherateofpopulationgrowth,whichwillreducethepercentageoftheeconomyderivingfromforest-basedrecreation.
Alternatively,wecouldassumethattheprojecteddemandforforest-basedrecreationalignswiththedemandforalltravelandtourismandthattheSouthfollowsthenationaltrends.Inthiscase,forest-basedrecreationtotalindustryoutputin
theSouthwouldincreaseslightlythrough2018.Eventhissmallincreaseinoutput,however,willlikelynotkeepjobsintourism,andthusinforest-basedrecreation,fromrisingatarateslowerthantherateofriseinoutput.Eventheservice-basedsectorsintravelandtourismhaveexperienced,andareexpectedtocontinuetoexperience,technicalchangethatreducesthejobsevenifoutputweretostaythesame.Franchising,low-serviceaccommodations,self-andlow-servicerestaurants,andcentralofficesformanagementandmarketingareallexpectedtoreducelabordemandinthetravelandtourismsectors(GriffithandZemanek2009,Woods2009).
Bioenergy
SmallamountsofwoodarecurrentlyusedtoproduceliquidtransportationfuelsorelectricityintheSouth,althoughthereisapotentialforsignificantincreasesinoneorbothoftheseusesofsouthernwoodinthenearfuture,dependingonpoliciesandmarkets.Inthischapter,wediscussthepotentialforchangesinjobsandoutputthatmightresultfromanincreaseintheuseofwoodforenergyandpreviousliteratureinthisarea.
Introductionofpoliciestoreducetheamountofcarbonintheatmosphere(includingFederalandStaterenewablefuelstandardsandrenewableelectricitystandards)ortheimpositionofacarbontaxorcarboncap-and-tradecouldshiftproductionofenergytorenewablesources,includingwood.Thus,economictheorywouldimplythatoutputandjobsintheconventionalliquidfuelsandconventionalelectricitysectorswoulddecrease,withanoffsettingincreaseinoutputandjobsinthebioenergysectors,allotherthingsheldconstant.Thismeansthatincreasesinthedemandfornon-renewableenergycouldleadtoincreasesinoutputandjobsintheconventionalliquidfuelsandelectricitysectors,providedthattechnologyisheldconstant.Ifmarketsfailtoaccountforthecostsofcarbondisposaltotheatmosphereandifallotheraspectsoftheeconomyareheldconstant,weexpectthatanyimpositionofnewstandardsandregulationswouldcauseanoveralldecreaseinoutputandjobsintheeconomy(Huang2010).
Allofthestudiesconductedtodateindicatethateconomicactivity(includingoutputandjobs)willincreaseintheloggingsector.Theseincreasesarelikelyattheexpenseofjobsandoutputinthecoal-miningsector,whichisoftenexcludedfromthesmallerregionalanalyses(Englishandothers2009,Faaijandothers1998,GanandSmith2007,Hodgesandothers2010,Perez-Verdinandothers2008).Dependingonthevariationsinwageratesandinfull-time/part-timeemploymentrates,netjobsmaybeincreasedordecreasedslightlyasaresultofbioenergy-feedstock
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procurementpolicies.Inthebioenergysector,jobsandoutputareexpectedtoincrease,withacorrespondingdecreaseinjobsandoutputintheconventionalenergysector(Huang2010,Hodgesandothers2010,Winston2009).
Previousstudiesoftheconversiontobioenergytypicallyuseeitheracomputablegeneralequilibriummodeloraninput-outputmodeltoevaluatetheimpactsonjobsandoutput.Input-outputmodelsaresimpleandrichindata,providingasnapshotoftheeconomyandclearlyilluminatingthelinkagesamongsectorsinthesystem.Computablegeneralequilibriummodels,oftenusingthedatadevelopedfortheinput-outputmodels,aremorecomplexandcanprovideeitherasnapshotoradynamicviewoftheeconomy.Althoughtheyhavetheadvantageofallowinginputsubstitutiontoadjustovertime,theircomplexityoftenmakesexplainingresultsandoutcomesdifficult.
Inthedevelopmentofinput-outputandcomputablegeneralequilibriummodels,thedesignationoftheregionsofimportancehasasignificanteffectonoutcomes:thesmallertheregionthegreaterthelikelihoodofexcludingareaswherelosseswouldoccur,whileincludingareaswheregainswouldoccur.Input-outputmodelsmayalsooverstateimpactsbecausedynamicadjustmentisnotpartofthemodelingframework.Englishandothers(2009),Faaijandothers(1998),GanandSmith(2007),andPerez-Verdinandothers(2008)allconductedstudiesinStates,regions,orcountrieswithoutcoal,andthusdonotaddressthenegativeeffectsoncoalmining.Manyofthesestudiesalsofailtoaccountforthenegativeeffectsofbioenergyproductionontheconventionalelectricitysector.OnlyEnglishandothers(2009)addressthenegativeeffectsthatautilityrateincreasewouldhaveonhouseholds.Forecastsofincreasedeconomicactivityfromtheconversiontobioenergyresultfromsomeorallofthefollowing:(1)largemultipliereffectsfromincreasesinbioenergyfeedstockproduction,aswellasincreasesinpowerandfuelproduction;(2)smallermultipliereffectsfromcoststohouseholds;(3)analysisofsmallregionsthatmaynotfullycaptureeffectsonsectorssuchascoalmining;and(4)excludingthecoalfeedstock,conventionalpowerandfuelsectors.Theincompletenatureoftheseanalyseslimitstheirusefulnessinevaluatingeconomy-wideeffectsofaconversiontobioenergyorindeed,anyrenewableenergy,fromconventionalenergy.
Computablegeneralequilibriummodelstypicallyincludetheeffectsonhouseholds(increasingutilityandfuelcosts),conventionalenergyproviders,wood-productscompanies(increasingwoodcosts),andbioenergyproviders(Hodgesandothers2010,Huang2010,Winston2009).Thesestudiespredictlossestoconventionalenergyprovidersandhouseholds,gainstobioenergyproviders,andvaryingeffectsonthewood-productssector.Onereasonforthediscrepancyinthewood-productspredictionsmaybeHuang’s(2010)assumptionofalargeincreaseinbiofuels,whichmayexceed
themodel’sabilitytocorrectlyrepresentthesectors.Huangprovidesnoexplanationforthecounterintuitiveresultsthatsawmilloutputandjobsincreasewhencellulosicethanolproductionincreases,orthatjobsdecreaseandoutputincreasesforwoodyelectricitywithimplementationofthebioelectricitypolicies.Hodgesandothers(2010)showsmallincreasesineconomicactivitywhileHuangshowssmalldecreases.Asthesestudiesusethesamemodelanddata,onepossibleexplanationfordiscrepanciesisthegeographicscaleoftheiranalysesasHuanganalyzesthesoutheastwhileHodgesandothersanalyzeonlyFlorida.
Themostcompletestudies,Hodgesandothers(2010)andHuang(2010),indicatesmallfuturechangesoverall(reductionsinconventionalsectorsandincreasesinthebioenergysector)withthechangesoccurringinthepowersectors.FortheSouth,economictheorywouldimplyanincreaseinloggingjobsandoutput,whichmaybeoffsetatlargerregionalandnationallevelsbydeclinesincoalproductionandtransportbutwouldnonethelessprovideincreasesinlocaljobsandincome.Dependingonthespecificpoliciesimplemented,competitionforwoodbetweentraditionalwood-usingcompaniesandbioenergycompaniesmayincreasewoodcostsandthusdecreasejobsandoutputinthetraditionalsectors,althoughthesechangeswilllikelybemaskedbylargerstructuralchangesinthewoodproductsandpapermanufacturingsectors.Finally,ashifttobioenergyonalargescalewouldrequiretheconstructionoffacilitieswithaccompanyinggrowth,albeittemporary,injobsandincome.Itisunclearhowmuchofthisconstructionwillsubstitutefordecreasesinconstructionand/ormaintenanceofconventionalenergyfacilities.
DiScuSSioN AND coNcluSioNS
Thefutureofforest-relatedjobsandincomeintheSouthisuncertain.Forecastingiscomplicatedbylargerecentchangesinthesesectors,combinedwiththeeffectsofthe2007–09recessionandthepotentialforbioenergy.Theloggingsectorisexpectedtorespondtochangesinthedemandfortimberproductsatpapermills,sawmills,andbioenergyplants.Unknownsincludehowtheevolutiontoamorehighlymechanizedandlessfamily-firmorientedsectorwillaffecttimberproduction.ShortagesofworkershavebeennotedinMaine,althoughcontractloggersfromCanadahavereadilyfilledthevoid.Concernisfrequentlyvoiced,butshortageshavenotbeendocumented.
Thewoodproductsmanufacturingsector,whichincludessawmills,isexpectedtorecovertopre-recessionlevelsofoutput,althoughjobsperunitofoutputislikelytocontinuetodeclineduetotechnicalchange,whichwillinfluenceoverallsectoremployment.Beyondthenextdecade,wedonotknowpreciselyhowwoodwillcontinuetobeusedinhousing,orhowtechnicalchangewillaffecttheproductionprocess.
307chAPTeR 12. Employment and Income Trends and Projections for Forest-Based Sectors in the U.S. South
Thepapermanufacturingsectorisexpectedtocontinuetocontractslightly,evenafterrecoveringfromtherecession.AreductioninfinepaperproductionintheSouthanddecliningoveralldemandforvirginpaperarelikelytoreduceoutput.Andcontinuedtechnicalchangeislikelytofurtherreduceemploymentinthissectoroverthenextdecade.
Futurechangesinjobs,income,andoutputderivingfromforest-basedrecreationintheSouthwilldependonchangesinthedemandforrecreationandtheleveloftechnicalchangeintheservicesector.Recreationdemandisapositivefunctionofpopulationandincome,soincreasesinthesefactorswouldbeexpectedtoleadtoincreasesinjobsandincomeinthesectorsthatproviderecreationservices.However,itislikelythatforest-basedrecreationwillincreaseatrateslowerthantherateofincreaseinpopulation.
Considerableuncertaintysurroundsthepotentialforwooduseinbioenergy,includingthesuccessofcommercialconversiontechnologiesforcellulosicethanol,policyrequirementsforrenewableenergy,carbonemissionscontrolschemes,andeventhefutureemploymentandoutputprofilesofspecificactivitiessuchasco-firingandethanolproduction.Understandardeconomictheory,implementationofpoliciestocorrectanonmarketexternality,suchasunpricedcarbonemissions,wouldbeexpectedtoleadtoshort-runmonetarylossesinaneconomy.Bysector,anincreaseinwooduseforbioenergycouldleadto(1)increasesinloggingaccompaniedbydecreasesincoalmining,(2)increasesinbioenergyproductionaccompaniedbydecreasesinconventionalenergyproduction,(3)decreasesinhouseholdincomebecauseofincreasesinelectricityandfuelcosts,(4)increasesinconstructionactivity,and(5)apotentiallossintraditionalwoodproductssectorsifincreaseddemandfortimberresultsinhighertimbercosts.
kNoWleDGe AND iNFoRmATioN GAPS
Considerableinformationislackingintheliteratureandinthedatathatcomplicatethedevelopmentofindustryandemploymentforecastsfortheforest-basedsectors.Thebioenergysectorisnewandcurrentlyuntrackedinnationaldataasadistinctsectorandthusislackinghistoricaldata.Asinanydevelopingindustry,technologiesandindustrystructuresarelikelytochangesignificantlyoverthenextdecade.Andthisassumesthebioenergysectordoesdevelop—thereisachancethissectorwillnotbecomeamajorwooduser.Interactionsbetweenexistingsectorsandthisnewsectorarealsounknown.
Assessingthefutureofemploymentandoutputintheforest-basedrecreationsectorislikewisehamperedbythelackofdata,althoughthisisneitheranewnordevelopingsector.Theonlydataavailableonforest-basedrecreationarecollectedbyindividuallandmanagementagencies.
Forexample,theNationalVisitorUseMonitoringSurveyconductedbytheU.S.ForestService(StynesandWhite2006),collectsinformationonrecreationalactivitiesonnationalforestsonlyandacomparablestudyisnotavailableforprivate-andState-ownedforest-basedrecreation.
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