1. Calibration and Validation of Global Forest Products Model (GFPM) Joseph Buongiorno, Shushuai Zhu University of Wisconsin - Madison

2. Acknowledgements USDA Forest Service Southern Research Station James Turner Jeff Prestemon

3. Objectives Synchronize GFPM and FAO data cycles Correct data errors Reconcile data with theory Assist users with automated procedures Check predictions with observations

4. Methods Data FAOSTAT World Bank World Development Indicators Elasticities and other parameters Calibration Data smoothing Static or dynamic calibration with data correction Validation Check data consistency Compare data and solution

5. Data 1: FAO Statistics

6. Data 2: World Bank WDI

7. Data 3: Forest Resource Assessment Extent of forest and other wooded land 2010 Country/area Land area Inland water (1 000 ha) Country area (1 000 ha) ForestOther wooded landOther land (1 000 ha) 1 000 ha % of land area1 000 ha % of land areaTotal of which with tree cover Angola58480470066190-0124670 Botswana1135120347916110531-150058173 Comoros3200183-0186 Djibouti6n.s.22092092-22320 Eritrea1532157153711415-166011760 Ethiopia1229611446504152685-799110430 Kenya3467628650502479710385112358037 Lesotho4419732894-03035 Madagascar1255322156882729913-55058704 Malawi323734006171-244011848

8. GDPPriceYear Fuelwood-developing countries0.05-0.10 Fuelwood-developed countries0.22-0.10 Sawnwood0.22-0.10-0.003 Standard error0.03 0.02 0.001 Plywood & veneer0.41-0.29-0.009 Standard error0.04 0.02 0.002 Particleboard0.54-0.29-0.006 Standard error0.070.02 0.002 Fiberboard0.35-0.46-0.002 Standard error0.06 0.02 0.002 Newsprint0.58-0.25-0.008 Standard error0.04 0.02 0.001 Printing & Writing0.45-0.37 0.003 Standard error0.03 0.02 0.001 Other paper & Paperboard0.43-0.23-0.004 Standard error0.03 0.02 0.001 Data 4: Elasticities of Demand

9. Calibration Goal = GFPM Inputs GFPM Spreadsheet ContentCalibration DemandInitial condition+elasticitiesYes SupplyInitial condition+elasticitiesYes ForestInitial condition+elasticities+ forest growth parameters Yes ManufactureI/O coefficients, costsYes RecyclingMax recyclingYes TransportationInitial import, export, costYes ExogChangeGDP growth and other changesNo

10. Calibration Procedure Smooth data (optional) world price (net exporter) Local price = world price + transport cost (net importer) Then, for each country, simultaneously: Estimate I/O coefficients & manufacturing costs Correct data if needed

11. Goal Programming Minimize (calibrated - reported production) +(calibrated - expected input) Subject to: –Observed imports, exports, and prices –Prior bounds on: I/O coefficients Manufacturing costs Recycling rates

12. Objective Function Deviation from reported production Deviation from expected input Weight=world price

13. Deviation of estimated from reported production Deviation of estimated from expected input Reported production Prior I/O coefficient

14. Material balance Non-negative manufacturing cost Import & export, given Output value Input cost

15. Feasible range of input i for output j Feasible post-consumer recovery bounds on I/O coefficients Paper consumption Recovery bounds Calculated I/O coefficient

16. Dynamic Calibration Purpose: Smooth yearly change of I/O coefficients Method: –Static calibration for each last 3 years –“Average” of calibrated I/O coefficients, production, imports, and prices

17. GFPM Calibration Interface

18. Post Calibration Data Checks Consumption = production + import – export Prices: Net Exporter=World Price Net Importer=World Price + Transport Cost Manufacturing cost= Output Price – Input Costs Recovered paper >= consumed waste paper

19. Input Data Check Results Input manufacturing cost Algeria plywood Derived manufacturing cost

20. GFPM Validation - Base Year Check predicted = calibrated: Demand Quantity Price Supply Quantity Price Manufacturing Quantity Price Manufacturing cost Net Trade

21. GFPM Validation - Base Year Algeria sawnwood price consumption

22. Long Term validation Set base year (e.g. 1980) Set exogenous variables (e.g. 1980-1995) GDP GDP/capita Compare predictions and observations

23. Industrial Roundwood Production

24. Industrial Roundwood Net Trade

25. Soldid Wood World Prices

26. Further Work Extend dynamic calibration –I/O and costs (consider all data simultaneously) –Demand (elasticities of demand) –Supply (elasticities of supply) Explore alternative trade theories –Export (monopolistic competition) Update long-term validation

27. GFPM Software, Data, Manuals http://fwe.wisc.edu/staticsites/buongiorno/book/GFPM.html