Calibration and Validation of Global Forest Products Model (GFPM)

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

8. Data 4: Elasticities of Demand

9. Calibration Goal = GFPM Inputs

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 Weight=world price Deviation from reported production Deviation from expected input

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

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

15. Feasible range of input i for output j bounds on I/O coefficients Feasible post-consumer recovery Recovery bounds Paper consumption 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 Algeria plywood Input manufacturing cost 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 consumption Algeria sawnwood price

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