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A "reasonable" scenario

Based on the information available from the recent studies of the Asia Pacific Rim, it is judged that the results of the ITTO sponsored analysis ("Analysis of Macroeconomic Trends") developed for Scenario #2 (Incremental Supply and Substitution) as discussed in more detail earlier in this review presently provides the most complete and reasonable probable outlook for the Asia Pacific Region in the near term. This scenario gives recognition to 'new supplies' in the region, including the expanded utilization of rubberwood and possibly coconut, as well as the effects of substitution in both conifer roundwood and new products. The timber supply model incorporates effects of changing timber utilization practices (effectively extending the supply) and the use of new and more efficient logging technology (increasing access and reducing waste) as incrementally linked to cost and timber price. Incorporation of relative manufacturing costs allows for estimation of shifts in the location as well as the level of production based on lowest-cost considerations, capturing the importance of log (raw material) cost and transportation-distribution costs. Productivity differentials (recovery rates) in different countries reflect the degree to conversion efficiency and comparative advantage. Differential exchange rates equilibrate trade flows in terms of local costs and values.

The projected log supply for Asia Pacific reflects the combined effects of changing tropical harvests (declining) in the Asia Pacific Region together with the offsetting effects of the 'new' supplies potentially available to the region through improved technology and harvesting (at higher costs) and through hardwood-conifer substitution. Changes in projected consumption due to the moderating effect of new supply on prices, and the induced shifts in location for manufacturing are highlighted. The greater use of conifer roundwood leads to greater production in the consumer-importer countries with a projected slowing or decline of tropical hardwood production in the traditional supplier countries.

Product substitution is also reflected in this scenario, with both conifer, temperate non-conifer and reconstituted wood and/or non-wood products dampening the consumption of traditionally consumed tropical hardwood products. Tropical hardwood log consumption would decline moderately, and price increases are dampened due to the offsetting influence of these dynamic market adjustments.

The simulated results of this production-substitution scenario were summarized in Table 59 to Table 6 land Figure 43 and are not repeated here. The quantitative results of this scenario, while appearing 'reasonable' are in themselves not as critical as is the capturing of many of the anticipated dynamic adjustments within the framework of an equilibrium analysis. The use of the Tropical Timber Trade Model, or the similar methodology embodied in the CINTRAFOR CGTM used in two of the other major regional studies reviewed in this report, allows for the systematic interaction of multiple factors influencing timber production, consumption and trade.

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