Projecting Future Markets

The Timber Assessment Market Model (TAMM) Project is still strong after 20 years. The project began at OSU in 1978 and continues to be active for faculty and students alike.

The model makes spatial market projections of US forest resources and industry over the next 50 years. It gives annual projections of volumes and prices in markets and estimates harvest and inventory by geographic region. Work on TAMM began in the mid 1970s, when the USDA Forest Service began to recognize that its policies had long-term and international effects that should be considered. The Forest Service commissioned a number of studies by economists and other researchers worldwide. Darius Adams (Forest Resources) got involved then, to show that computer models of the market and resource could be used to predict policy impacts. The model was first published in 1979, in FRL Research Bulletin 27.

TAMM is now the largest such model in regular use for any forest sector industry anywhere; it is even more complex than the models used to make global agroforestry predictions. Its complexity stems from the inclusion and integration of companion models that represent solid wood and timber, pulpwood, and fuelwood markets; originally part of the same model, they are now separate but linked.

Another complicating factor is the vast amount of data from diverse sources called on by the model. The resource data in the model are national; the market information is international. Among foreign countries, Canada (our biggest trading partner for wood and wood products) is modeled in most detail; the representation of trade across the Pacific or Atlantic has much less detail.

The most frequent use of the model is to project how various policies would affect resources and industry. The biggest user and the primary sponsor of the project is the Forest Service, but the Environmental Protection Agency, Bonneville Power Authority, Bureau of Land Management, and Wilderness Society have all made use of the model. Several companies have also used it. Originally a few companies kept their own versions of the model, but because of the complexity of the model and the trouble of keeping it up to date, in recent years they have preferred to use the resources available through the FRL.

To investigate the effects of a policy, researchers do dozens of runs, each time varying conditions or assumptions slightly, to figure out what the outcome means. Adams comments that letting the data in the model speak as much as it can without intervention, and interpreting it meaningfully, is an art; it requires the researcher's judgment, based on experience.

Reexaminations must be done fairly often; predictions change over time as markets change (new products come in, old products disappear, incomes rise or fall, consumer preferences change). As a result the project collaborators must constantly add new data and update the models.

Collaborators provide the data concerning the resource base, with information about forest inventories, and the models of tree growth and of the industries that use forest products. At OSU, Adams maintains the structure that integrates resource and market segments, as well as the resource and solid wood industry models. The Forest Service's Forest Products Laboratory in Madison, Wisconsin, maintains the pulp and paper model.

Data come from researchers across the country. Within the College of Forestry, Claire Montgomery (Forest Resources) provides housing forecasts for the model. Collaborators from the Forest Service's Pacific Northwest Research Station include several College of Forestry adjunct faculty; Richard Haynes is the Forest Service's timber assessment leader and provides policy input to the model; Ralph Alig provides land-use modeling, David Brooks develops international trade forecasts, and John Mills developed the timber inventory projection and coordinates the forest inventory data. At the Forest Service's Forest Products Laboratory in Madison, Peter Ince developed the pulp and paper model and Henry Spelter contributed the model of solid wood demand. Timber inventory data come from Forest Service research units around the country. Models of the Canadian timber industry and data for their implementation are developed through regular consultation with researchers on the Canadian Forest Service's Industry, Economics and Program Branch.

Early in the project, the choice of machine to run the model on was a problem, because of the complexity and the number of languages represented. (Each submodel works in its own way and in its own language, from PASCAL and FORTRAN to newer languages like C.) Although modern personal computers are now sophisticated enough to handle the model, the choice of operating platform is a continuing problem.

Another continuing challenge is constant change in the resource. A recent key change has been shifts in ownership, which TAMM must obtain from other sources. For example, the move of corporate investors into forest ownership was largely unforeseen 15 years ago but has changed the nature of forest management and expected yields, especially in the South and the Pacific Northwest. In addition, every decade tens of millions of acres shift into and out of forestry, from farming into forestry and back and from forestry into urban, developed, and special uses (which is not reversible). Those changes are hard to anticipate and can lead to major shifts in timber supply potentials.

One factor that has kept the project vital is that it is subject to some controversy. Modelers disagree about the model's assumptions regarding how much information is available to people as they make management decisions. TAMM has been based on the premise that people develop expectations of the future based exclusively on historical experience; a competing type of model assumes that people are able to predict the outcomes of their actions with essentially perfect accuracy. (This type is called an Òintertemporal optimization modelÓ.) In response to the controversy, Adams and his colleagues developed their own intertemporal optimization model, the Forest and Agricultural Sector Optimization Model (FASOM). Initial work on this model was funded by the Environmental Protection Agency, with assistance from the Forest Service. They are now incorporating some of its intertemporal capabilities into TAMM, especially to supplement its modeling of private forest management investment. Like TAMM, FASOM is a collaborative effort, involving researchers from other universities (Bruce McCarl of Texas A&M University), the Environmental Protection Agency (Steve Winnett), Forest Service (Ralph Alig), and private consultants (J.M. Callaway, now in Denmark).
 
 

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