A range of factors affect the demand for wood and wood products, including: the price of the products themselves; the price of substitute products; population and income levels; and trends in consumer preferences. In addition to these factors, most forest products are intermediate goods. They are used in other industrial processes or commercial activities (e.g. construction), such that technological changes in these processing or end-use sectors can have a major impact on the demand for forest products through the efficiency with which they are transformed into other products.
The use of wood products in the future will continue be challenged by substitute products from the metals, plastics, agricultural, cement, and chemical industries. A correlation between increasing incomes and preferences for environmentally friendly products and outcomes suggests a future of increasingly complex interplay in the demands placed on forests and the relative acceptability to consumers of forest products and competing non-forest substitutes. Several of these factors will be examined later in this paper. This first section concentrates on the two main forces that tend to drive the demand for forest products over time: population and income growth.
Population growth broadly acts to increase the demand for forest products by increasing the number of forest product consumers.3 World population has roughly doubled in the last four decades, and growth in the consumption of roundwood (including wood fuel) has increased at only a marginally lower rate. Rates of population growth in most developed countries have declined (and are indeed now negative in many developed countries) and it is expected that a changing distribution of global population, from developed towards less developed countries, will have a moderate impact on future forest product demand patterns.
The distribution of world population and expected population growth is shown in Table 1. This shows that developed countries currently account for just under one-fifth of world population. The latest population projections from the UN Population Division, indicate that world population will probably increase by just under 20% over the next 15 years. It is expected that most growth will occur in less developed countries, led by African countries where population is expected to grow by over 40% or over twice the world average. In contrast, population in developed countries is expected to grow by only 6% and the share of world population in developed countries is expected to decline to 17%. Asia is and will remain the world's most populous region with over half of the world's population.
Table 1: World population in 1995 and projection for 2010 (medium fertility variant)
Region |
1995 |
2010 |
Growth 1995 - 2010 | |||
(millions) |
(%) |
(millions) |
(%) |
(annual) |
(total) | |
Countries within OECD |
||||||
Europe |
432 |
8% |
431 |
6% |
+0.0% |
-0.3% |
Asia and Oceania |
252 |
4% |
270 |
4% |
+0.5% |
+7.0% |
The Americas |
388 |
7% |
440 |
7% |
+0.8% |
+13.4% |
Subtotal |
1,072 |
19% |
1,141 |
17% |
+0.4% |
+6.4% |
Non-OECD countries |
||||||
Europe |
295 |
5% |
282 |
4% |
-0.3% |
-4.6% |
Asia and Oceania |
3,214 |
57% |
3,819 |
57% |
+1.2% |
+18.8% |
The Americas |
386 |
7% |
465 |
7% |
+1.3% |
+20.7% |
Africa |
719 |
13% |
1,028 |
15% |
+2.4% |
+42.8% |
Subtotal |
4,614 |
81% |
5,593 |
83% |
+1.3% |
+21.2% |
World total |
5,687 |
6,734 |
+1.1% |
+18.4% | ||
Source: UN (1998)
The second principal factor influencing the demand for forest products is wealth or income. Leaving aside the issue of income distribution, demand for most forest products generally increases as countries become richer and can afford to buy more of all goods and services. In the context of markets for wood products, the only major exception to this is wood fuel. Per capita consumption of wood fuel tends to decline as incomes increase, because people switch towards using more convenient types of energy4.
Current and projected gross domestic product (GDP) for all the main regions of the world is shown in Table 2. GDP is currently very unevenly distributed. For example, 80% of world GDP is accounted for by the 29 OECD countries, in stark contrast to their 20% share of world population. Asian developing countries account for 13% of world GDP and 7% of world GDP is produced in other less developed countries.
It is expected, however, that GDP will grow at the highest future growth rates in less developed countries. Many less developed countries are expected to sustain GDP growth at over 3% per annum (and some much faster than this) compared with growth of only 2% to 3% in most developed countries5. Thus, by 2010, the share of world GDP produced in less developed countries is expected to increase from 20% to around 35%. Also, compared with the size of their economies in 1995, less developed countries are expected to double in size by 2010, whereas developed countries are expected to increase by only around 50%. These developments may have a profound effect on the demand for forest products.
Table 2: World GDP in 1995 and projection for 2010
Region |
1995 |
2010 |
Growth 1995 - 2010 | |||
(billions) |
(%) |
(billions) |
(%) |
(annual) |
(total) | |
Countries within OECD |
||||||
Europe |
5,997 |
30% |
8,797 |
27% |
2.6% |
46.7% |
Asia and Oceania |
3,664 |
18% |
6,049 |
18% |
3.4% |
65.1% |
The Americas |
6,147 |
31% |
8,941 |
27% |
2.5% |
45.5% |
Subtotal |
15,807 |
79% |
23,786 |
72% |
2.8% |
50.5% |
Non-OECD countries |
||||||
Europe |
523 |
3% |
958 |
3% |
4.1% |
83.2% |
Asia and Oceania |
2,369 |
12% |
5,864 |
18% |
6.2% |
147.5% |
The Americas |
785 |
4% |
1,411 |
4% |
4.0% |
79.7% |
Africa |
476 |
2% |
860 |
3% |
4.0% |
80.6% |
Subtotal |
4,153 |
21% |
9,092 |
28% |
5.4% |
118.9% |
World total |
19,961 |
32,879 |
3.4% |
64.7% | ||
Source: FAO (1997b) GDP figures have been converted to US$ at 1987 prices and exchange rates
Population and income growth may not only affect the demand for forest products, but also affect the supply of wood raw materials. For example, increasing population density increases the pressure to convert forestland into other uses and higher incomes tend to result in higher demands for environmental services from forests (Solberg et al 1996). Thus, the changes outlined above are likely to put pressure on forest resources both in terms of the wood and fibre products that will be desired from them and the other non wood goods and services that they will be expected to produce (which may consequently reduce their availability for timber supply).
A large number of economic, technical and biological factors are likely to influence the future supply of wood and other fibre. Box 1 lists some of the factors most likely to have a significant impact on supply.
The factors listed in Box 1 have been identified and considered as part of this analysis. The list is not an exhaustive collection, but rather a subset of a larger set of variables that have been identified as affecting wood supplies in various studies within the last decade (see footnote on page 1). These variables have been chosen because of their suspected importance and the availability of information about their presence and likely impacts on forests around the world.
Wood supply from the natural forest:
Management regime (as expressed by cutting cycle and intensity);
Forest loss - e.g. Unplanned and planned deforestation; and
Forest change - e.g. forest degradation, conversion to legally protected areas or expansion of the exploitation frontier.
Wood supply from industrial forest plantations:
Afforestation rate; and
Development gains in rates of growth and fibre yields.
Non-wood fibre supply:
Capacity to collect and process non-wood fibre sources.
Recovered fibres:
Capacity to collect and process recovered paper.
Box 1: Factors most likely to affect future wood and other fibre supplies
The implications of Sustainable Forest Management (SFM) for wood and other fibre supply are frequently mentioned in forest policy discussion. The concept of SFM has been broadened in recent years and, as a result, the objectives of natural forest management in many countries are gradually shifting emphasis away from predominantly management for timber production towards management that balances timber production with ecological and social sustainability. These changes could have significant impacts on the amount of timber which can be harvested from the world's natural forests in the future.
Deforestation remains a serious forestry policy issue for most regions. The main direct impact of deforestation on future wood availability is that it reduces the area of forest available for wood supply. A more subtle impact it has, is that it increases the pressure on forestry policymakers to place forest areas in legally protected areas (see below) or prevent harvesting in some other way (e.g. logging bans), thus further reducing the amount of wood that can be harvested from the remaining forest areas.
A more subtle change that has occurred within many of the world's forests in recent years is the process of gradual forest degradation. Forest degradation can manifest itself in many ways including: loss of site fertility; soil erosion; reduction in biological diversity; and fragmentation of forest areas, but probably the single most important indicator of degradation (and one of the most important in terms of future timber supply) is the gradual loss of standing biomass.
Forest degradation will affect timber supplies by reducing the amount of standing commercial timber available for harvest in the future. Thus, for example, as countries move from harvesting old-growth or primary forest stands into second growth forest, it can be expected that harvesting volumes per unit of area will decline. Such shifts are likely to take place over several decades in countries where virgin forest still accounts for a major share of current wood production (e.g. many tropical countries) and they have been taken into account in this analysis.
Partly in response to the problems of deforestation and forest degradation, countries are also placing more natural forest into legally protected areas. As areas of forest are placed into protected areas, they are taken out of production and this reduces the long-run sustainable supply of timber that can be harvested from the natural forest. This is another aspect of forest change that has been examined in the analysis.
Increasing the forest area by establishing forest plantations is one way in which future supply of wood from forests can be increased. Table 3 shows the current estimated rates of afforestation in some of the main countries actively pursuing vigorous plantation establishment policies. Because tree growth in plantations is generally much higher than in natural forests, policy developments that promote the establishment and use of plantations can have a significant impact on future wood supplies.
There is frequently a significant difference between planned and actual afforestation rates, due to poor establishment practices. But, for the purposes of this study, the planned rates were used as a starting point for the analysis. A more detailed examination of the outlook for plantations is given in Part 2 of this report.
Table 3: Estimated annual rate of afforestation in selected countries
Africa |
South America |
Asia-Pacific | |||
Country |
Area 1,000 ha |
Country |
Area 1,000 ha |
Country |
Area 1,000 ha |
South Africa |
24 |
Argentina |
25 |
Australia |
20 |
Zimbabwe |
5 |
Brazil |
200 |
Bangladesh |
50 |
Chile |
120 |
China |
500 | ||
Uruguay |
20 |
India |
500 | ||
Indonesia |
250 | ||||
Malaysia |
50 | ||||
New Zealand |
50 | ||||
Pakistan |
50 | ||||
Philippines |
44 | ||||
Sri Lanka |
10 | ||||
Source: FAO (1999a)
Development gains, particularly in industrial forest plantations, are another key factor that will affect future potential wood supply. Such gains will include both silvicultural and genetic gains. Vichnevetskaia (1997) provides a partial survey of studies published on factors affecting productivity in tropical forest plantations. Such gains are a further potential source of increased wood supply, although they have not been included in the analysis presented later.
Currently, wood is the major raw material input to the global pulp and paper industry. Significant levels of non-wood fibres are currently used in a handful of countries, most notably in: China; India; and a few other Asian countries. However, there are also currently indications of increasing interest in non-wood fibres, particularly in North America.
At present, the most common non-wood fibre used to make pulp and paper is straw (see Table 4), which accounts for 46 % of total non-wood fibre consumption (Atchison, 1995). This is followed by bagasse (14 %) and bamboo (6 %). Other non-wood fibres, such as cotton, hemp, sisal, and kenaf, are gradually becoming more important in the manufacture of pulp and paper.
Table 4: Global non-wood fibre papermaking capacity
Material |
Capacity (thousand metric tons) | |||
1985 |
1988 |
1990 |
1993 | |
Straw |
6,166 |
5,260 |
7,623 |
9,566 |
Bagasse |
2,339 |
2,267 |
2,646 |
2,984 |
Bamboo |
1,545 |
1,674 |
1,468 |
1,316 |
Miscellaneous |
3,302 |
6,366 |
6,870 |
6,870 |
Total non-wood fibre papermaking capacity |
13,352 |
15,567 |
18,607 |
20,736 |
Total paper and paperboard production |
178,558 |
225,887 |
238,939 |
250,359 |
Estimated production from non-wood fibres |
7.4% |
6.9% |
7.8% |
8.3% |
Source: Mabee and Pande (1997)
In total, it is estimated that non-wood fibres currently account for around 8% of global pulp and paper production. Given the world's area of agricultural crops, their potential contribution to meet future demands for fibre is vast, but much will depend on the economic, environmental and technical feasibility of collection and processing the resource. For example, pollution from non-wood fibre pulp mills is becoming an increasing environmental concern in China.
More important to the future wood product supply and demand balance is the outlook for wastepaper recovery and utilisation. Figure 1 shows how the utilisation of wood and non-wood fibre pulp in the manufacture of paper has declined over the last 25 years, largely due to the increased use of recovered paper in the total fibre furnish.
Figure 1: Trend in the utilisation of pulp in the manufacture of paper
Source: FAO (1999b)
Table 5 shows that currently, most regions of the world are recovering around 40% of the paper they consume.6 The exceptions to this are Africa and the countries of the former USSR. Poor infrastructure may be the cause of low recovery rates in Africa and the abundance of forest resources is almost certainly the cause of the very low recovery rate in the countries of the former USSR. Because of the size of its domestic market for paper products, North America is by far the largest producer of recovered paper in the world.
Table 5: Global wastepaper recovery in 1995
Region |
Wastepaper recovery |
Recovery as a proportion of paper consumption |
Wastepaper consumption |
Consumption as a proportion of paper production |
1,000 MT |
% |
1,000 MT |
% | |
Europe |
31,923 |
45 |
32,297 |
46 |
Asia-Pacific |
35,603 |
40 |
40,946 |
40 |
North America |
41,999 |
40 |
34,427 |
45 |
Latin America |
4,354 |
42 |
5,853 |
31 |
Africa |
901 |
26 |
924 |
23 |
Former USSR |
40 |
1 |
629 |
2 |
World |
115,820 |
41 |
116,076 |
41 |
In terms of wastepaper utilisation, the table shows that North America and Europe lead the world in terms of the share of paper produced from recycled fibre, while the Asia-Pacific region is the largest consumer of recovered paper overall. However, even though North America has the highest rate of utilisation, the region has consistently recovered more wastepaper than it uses (due to domestic recycling and waste management policies) and has become the world's dominant exporter of recovered paper. Much of this material is sold to the Asia-Pacific region.
Europe, Africa, Latin America and the Former USSR each have a lower levels of imports and demand that could easily be met by increases in national recovery levels in these regions.
The above analysis has described the main factors that are likely to affect forest products supply and demand patterns in the future.
On the demand side, consumption patterns are expected to switch somewhat towards less developed countries. Also, as incomes rise, other forest functions are likely to become increasingly important and this will have an impact on future wood supplies.
On the supply side, the description given above has shown that there is a wide range of factors which might affect future supplies. The challenge for policymakers, will be to influence these factors to satisfy market needs while, at the same time, pursuing wider forestry policy objectives such as SFM.
Following-on from these general themes, several particularly important topics have been chosen for more detailed examination in this analysis. These include:
1. the effect on wood supplies of competing demands for forest-land;
2. the potential for plantations and non-forest supply sources to meet future wood and fibre demands;
3. the potential for technological change to help balance future wood and wood product supply and demand; and
4. the impact of trends such as globalisation and forest certification on forest products markets
These themes are covered in Part 2 of the report.
3 Other more complex demographic factors may also affect demand in more subtle ways. For example, the age structure of a country's population will affect household formation and, consequently, demand for construction materials such as sawnwood.
4 Total consumption of wood fuel may still increase however, if population increases faster than per capita consumption declines.
5 The current economic turmoil in Asia has the potential to alter some of the projections used in this analysis and the eventual long-run outcome of recent events is currently unpredictable. However, it is believed that the effects of recent events will not significantly alter the main conclusions of this analysis, but are more likely to merely delay some of the expected outcomes by a few years.
6 The technical limit to wastepaper recovery will depend upon a number of factors and can not currently be determined. Some countries already recover much higher proportions of their paper consumption than are shown here (Japan, for example, which recovered over 50% of consumption in 1995). Another factor that will confound any analysis of future recovered paper supply is the trend in some countries to use this resource for the production of energy. However, the projections for the recovery of wastepaper presented later on are believed to be feasible, given current policies governing the collection and use of this resource.
