Optimization to support policy decisions stimulating value creation in the forestry sector

Abstract

Following past decades' extensive afforestation efforts in Norway, mature forest volumes are currently increasing. Forestry politics call for sustainable and efficient resource usage and increased regional processing, improving regional value creation. We demonstrate how a blend of methods from operations research and regional macro-economics may be utilized to support policy and decision makers in this process. The operations research perspective is concerned with finding an optimally designed wood value chain and an aggregated planning of its operations, taking a holistic perspective on strategic-tactical level. Using Input-Output analysis methods based on statistics and survey data, regional macro-economics helps to estimate the impact on society beyond immediate value chain activities. Combining these approaches in a common mathematical optimization model, a balance can be struck between business and regional political interests. We demonstrate the concept on a stylized case investigating the effects of road transport subsidies on efficient resource usage, transportation, industry development and value creation. Concluding, we discuss how the found insights may support public administration to explore policy effects more comprehensively and to form effective measures stimulating growth in rural areas.