chapter 12. employment and income trends ... - srs… · employment and income trends and...

293chAPTeR 12. Employment and Income Trends and Projections for Forest-Based Sectors in the U.S. South

KarenL.Abt1

key FiNDiNGS

•Thesouthernloggingsectorisexpectedtoexperiencesmallincreasesinbothindustryoutput(3percent)andjobs(2percent)from2008to2018.Increaseddemandfrombioenergyisexpectedtocounteractincreasingtrendstowardmechanizationandreduceddemandfromsometraditionalwood-usingindustries.

• Southernwoodproductsmanufacturingisexpectedtoincreaseinindustryoutput(2.2percent)inconjunctionwiththehousingrecoveryafterthe2007–09recession.Technicalchangeisexpectedtocontinue—withcapitalsubstitutingforlabor—leadingtocontinueddeclinesinjobsthrough2018(8percent).

•Thesouthernpapermanufacturingsectorisexpectedtocontinuecontracting,withindustryoutputdecliningby17percentthrough2018.Outputdeclinesandcontinuedtechnicalchangeareexpectedtoreducejobsby26percentfrom2008to2018.

• Forest-basedrecreationisexpectedtoincreasefollowingthe2007–09recession,butatlowerratesthanoveralltravelandtourism.Increasesinoutputmaybelimitedbecauseforest-basedrecreationpercapitaisnotexpectedtoincreaseatthesamerateasothertravelandtourism.Inaddition,technicalchangeisexpectedtocontinuetoreducelabordemandforthesamelevelofoutput.

•BioenergydemandsresultingfromStateandFederalpoliciesareexpectedtoleadtoincreasesinloggingsectorjobsandoutput.Ifcompetitionoccursbetweenbioenergydemandsandtraditionalwoodproductsdemands,additionallossesinjobsandoutputinthewoodproductsandpapermanufacturingsectorswouldbeexpected.Outputandemploymentgainsfrombioenergydevelopmentandproductionwouldbeoffsetbylossesinconventionalenergy,includingmining,drilling,transport,andfuelandelectricitygenerationanddistribution.TheoveralleffectsonoutputandemploymentintheSouthareexpectedtobesmall.

1KarenL.AbtisaResearchEconomistattheForestEconomicsandPolicyResearchWorkUnit,SouthernResearchStation,U.S.DepartmentofAgricultureForestService,ResearchTrianglePark,NC27709.

iNTRoDucTioN

Southernforestsareusedforrecreation,providewoodinputstomanufacturing,createscenery,andenhancethequalityoflife.Inadditiontoprovidingjobsandincometothelocalandregionaleconomy,forestsarenowconsideredapotentialsourceofwoodybiomassforbioenergy.Thischapteraddressestheshort-termfutureoutputandjobsinforest-usingsectorsofthesoutherneconomy.Specificsectorsaddressedincludeforestryandlogging,woodproductsmanufacturing,papermanufacturing,forest-basedrecreation,andthenewbioenergysectors.

Economistsrepresenttheregionaleconomythroughproductionfunctions.Aproductionfunctionisastylizedmodelthatexpressesindustryorbusinessoutputs(typicallymeasuredindollars)asafunctionoftheinputsneededtogeneratetheoutputs.Forexample,agenericproductionfunctionwouldrepresentoutputasafunctionofcapital,labor,energy,materials(suchaswood),andotherinputs.Overtime,weexpectthisproductionfunctiontochangeastechnologyreducestheamountofinputsneededtoproducethesamelevelofoutputbysubstitutingcapitalforlabor,energy,andotherinputs.

Assumingthatcompaniesareprofitmaximizingandrisk-neutral,theoptimaloutputlevelandtheoptimalcombinationofinputsneededtoachieveitwillbedrivenbythepricesoftheinputsandoutputs.Wetypicallyexpecttheinputstobecomplements(anincreaseinoneinputrequiresanincreaseintheother)orsubstitutes(anincreaseinoneinputleadstoadecreaseintheother).Changesininputuselevelscanbetheresultofchangesintheoutputlevelorchangesininputpriceorquality.Thus,anindustryorbusinesscandecreaseitsdemandforlabor(jobs)becauseofdecreaseddemandforitsoutputs,orbecausecapitaloranotherinputissubstitutingforlaborintheproductionfunction.

Aconundrumofeconomicanalysisisthatapositiveoutcomeinoneareaislikelyoffsetbyanegativeoutcomeelsewhere.Forexample,increasingwagesisusuallyperceivedasapositivebecauseitleadstoahigherstandardoflivingforworkers,butitalsoleadstoincreasedlaborcosts,which

Chapter 12. employment and income Trends and Projections for Forest-Based Sectors in the u.S. South

294The Southern Forest Futures Project

willresultinsubstitutingcapitalforlaborintheproductionfunction.Theresultisalossofjobs,whichistypicallyseenasanegativeoutcome.Similarly,gainsinonesector(suchaslogging)arelikelyoffsetbylossesinadifferentsector(suchascoalmining);andgainsinonegeographicarea(suchastheSouth)maybeoffsetbylossesinotherregions(suchastheNorthernAppalachians).Theseoutcomesillustratethatthedefinitionofsectors,inputs,andareasofinterestarelikelytoinfluencetheoutcomeofanyeconomicanalysisofaregion’seconomy,whichshouldbekeptinmindwhilereadingthefollowingassessment.

Throughoutthischapter,weusesomespecificeconomicandmodelingterms.Theyaredefinedbelow:

Recession:aneconomictermimplying,generally,adeclineineconomicactivitythatisbetweenapeakandtroughofeconomicactivity.TheNationalBureauofEconomicResearchistheacceptedarbiterofwhenrecessionsbeginandend(seehttp://www.nber.org/cycles/recessions.html).TherecessionreferredtointhischapterbeganinDecember2007andcontinueduntilJuneof2009.

Technical change: Technicalchangeisaneconomictermrepresentinganychangeintherelationshipbetweeninputstoaproductionprocessandoutputsfromaproductionprocess.Thisisoftenanimprovementincapitaluse,leadingtoareductioninlaboruse,butcanalsoresultfromadministrativeorpolicychanges.

Jobs (also employment):Thesearenotfull-timeequivalents,andsorepresentanycontinuousemployer-employeerelationshipforwagesandsalary,whetherfull-orpart-time.

Output (also total industry output): Outputisaneconomictermrepresentingthetotaldollarvalueofafirmorsectororeconomy.Thisvalue“doublecounts”thecontributionofasectorwhenaddingupthetotalsforaneconomy—thevalueofalogwouldbecountedintheoutputoftheloggingsector,and,forexample,intheoutputofthesawmillsector.Whenaddingupthesectorvaluesacrossaneconomy,thetotalvalueaddedshouldbeusedinplaceofoutput;howeverinthischapterweuseoutputbecausethemodelsandforecastsweredevelopedforoutputandnotfortotalvalueadded.

Gross regional product (also gross domestic product): aneconomictermrepresentingthetotalvalueoftheproductionofgoodsandservicesforaregion(orStateorcountry).

Total value added: aneconomictermthatnetsoutthecostofinputs(suchaslogs)thatarecountedasanotherfirm’soutputsandisnearlyequivalenttogrossdomestic(orregional)product(indirecttaxesareexcluded).Othercomponentsoftotalvalueaddedincludeproprietor’sincomeandproperty-typeincome.

Income: represents,inthischapter,wageandsalaryincomefromajob.Wageandsalaryincomeisalargecomponentoftotalvalueadded,andthusisalargecomponentofgrossregionalproduct.

Forestry and logging: asectorthatincludesboththegrowingandmanagementofforests[forestryispartofNorthAmericanIndustryClassificationSystem(NAICS)sector115]andtheharvestingandtransportationoftimber(NAICS113).

Forest-based recreation: asectorthatrepresentsallexpendituresmadetoparticipateinforest-basedrecreation,includinghiking,hunting,wintersports,watersports,fishing,naturestudyandotherrecreationactivitiestakingplaceinforests.ThissectorisnotdefinedseparatelyinNAICS,butcouldincludeportionsofothersectorsincludingtransportation(NAICS48),accommodations(NAICS721),eatinganddrinkingplaces(NAICS722),recreationandentertainment(NAICS713)aswellaspartsofothersectors.

Bioenergy: asectorthatrepresentscurrent(orpotential)usesofwoodtoproduceenergy(pellets,liquidfuels,andelectricity).ThissectorisnotdefinedseparatelyinNAICS,butcouldincludeportionsofmiscellaneouswoodproducts(NAICS321999),electricitygeneration(NAICS237130)andethanolsectors(NAICS325193).

Wood products manufacturing: asectorthatincludesprimarysawmillsaswellasmanufacturersofveneerand/orplywood,engineeredwoodmembers,andreconstitutedwoodproducts(NAICS321).Thesecompaniesmanufactureand/orusesolidwoodproductssuchaslumber,millwork,pallets,mobilehomes,andtrusses.

Paper manufacturing: asector(NAICS322)thatincludesfirmsthatmakepulp,paperand/orconvertedpaperproducts.

Input-output models: modelsusedtorepresentstatic,detailedproductionrelationshipsbetweeninputsandoutputs,andjobsandincome.

Computable general equilibrium models: modelsusedtorepresentchangesinaneconomyusingestimatedorassumedequationsandparameters.

meThoDS

Toaddressthefutureofjobs,income,andcontributionsofforest-usingsectorstotheregionalorlocaleconomy,wefirstevaluatedhistoricaltrendsandcurrentconditionsintheforestryandlogging,woodproducts,andpapermanufacturingsectors,aswellasforest-basedrecreationandfuturebioenergysectors.Wethendevelopedprojections,totheextentpossiblegiventhedatalimitations,forforest-usingsectors.

295chAPTeR 12. Employment and Income Trends and Projections for Forest-Based Sectors in the U.S. South

Theforest-basedrecreationandbioenergysectorshaveinadequatedataand/oranalysesatthenationallevelandfortheSouththatlimitsourabilitytoprojectthesesectors.Forest-basedrecreationisnotspecificallytrackedinthenationaleconomicaccounts,andeventhedataavailablenationallyhavenotbeensubsetfortheSouth,limitingourabilitytoprovideSouthwidetrends.Thebioenergysector(distinctfromby-productsofwoodproductsandpapermanufacturing)isfairlynewanddoesnothaveseparatedataforhistoricalanalysis.

Forecastsforthelogging,woodproductsmanufacturing,andpapermanufacturingsectorsweredevelopedforasingledecade,usingtrendsinthesoutherncomponentofeachsectortodownscalenationalforecasts.ThesenationalandsoutherntrendsweredevelopedfromtheIMPLAN(MicroImplanGroup,Inc.2010)database(percentofeachsectors’outputsthatwerefromtheSouth)andfromthe2007ResourcesPlanningActdatabase(percentofeachsectors’inputsthatwerefromtheSouth).Forecastsofeconomicactivityatthesectorlevelwerenotavailablebeyond2018.

ThenationalforecastsweredevelopedbytheBureauofLaborStatistics,DepartmentofLaborusingmethodsoutlinedinchapter13oftheBLSHandbookofMethods(U.S.DepartmentofLaborBLS,2011).Theseforecastsaredevelopedeverytwoyears,fora10-yearforecastperiod.Therearesixseparatemodelingcomponents,eachofwhichbuildsonthepreviousoutputs.Thesesixcomponentsare:

1.ForecastofLaborSupply:developedfromforecastsoflaborparticipationratesandpopulation.

2. ForecastofAggregateEconomicGrowth:BLScontractswithMacroeconomicAdvisers,LLCtodeveloptheseforecasts,usingtheforecastoflaborsupplyasaninput.

3. ForecastofCommodityFinalDemand:thismodelingcomponentdisaggregatestheeconomicgrowthintogrowthinthecomponentsoffinaldemand(personalconsumptionexpenditures,grossprivatedomesticinvestment,foreigntrade,andgovernmentdemand)foreachcommodity.

4. ForecastofSectoralIndustryOutputs:usinganinput-outputmodelwithinputsfromaboveandproductionrelationshipsfromtheBureauofEconomicAnalysis,thecommodityfinaldemandsareconvertedintoindustrytotaloutputs.

5. ForecastsofIndustryEmployment:jobsareestimatedasafunctionoftotalindustryoutput,wages,pricesandtime,asasystemofequations.WagesderivedfromtheCurrentEmploymentStatisticsandtheCurrentPopulationSurvey,pricesareadjustedusingforecastinflation,andtimeaccountsforchangesinlaborproductivity.

6. ForecastsofOccupationalEmploymentandJobOpenings:amatrixof300industriesby750occupationsisusedtocalculatehowforecastsofindustryemploymentresultinparticularjobs.

Thenationalforecastsforthetourism-relatedsectorsarealsopresented,asaretheexpectedchangesinjobsandincomethatcouldresultfromthesesectors.Forecastingthebioenergysectoriscomplicatedbecausethetechnologiesareunderdevelopmentandthemarketsarenotwellestablished.Inaddition,thereisconsiderableuncertaintyregardingthepoliciesandtechnologiesthatwilldrivetheindustriesandresultingoutputsandjobs.

DATA SouRceS

DatausedinthisanalysisareprimarilyfromtheU.S.DepartmentofCommerce,BureauofEconomicAnalysis(BEA)(2010),Woods(2009),andtheTravelandTourismSatelliteAccount(GriffithandZemanek2009).Inaddition,datafromIMPLAN(MicroImplanGroup,Inc.2010)andfromthe2007ResourcesPlanningActdatabasewereusedtodownscalethenationallaborforecaststotheSouth.

ReSulTS

Past and current Role of Forest-Based Sectors in the Southern economy

Wood-relatedmanufacturing,includingloggingandforestrycomprisedlessthan1percentofsouthernjobsandemploymentincomein2008(figs.12.1and12.2)(U.S.DepartmentofCommerce2010).Thiswasdownfrom1.2percentin1990(figs.12.3and12.4),andresultedfromboththegrowthoftheentiresoutherneconomyaswellasadeclineinwood-relatedemployment(figs.12.5and12.6).Wood-relatedincome(inconstant2008dollars)increasedfrom1990to2000,butfellbackto1990levelsafter2000,withmostofthevariationcomingfromthewoodproductsandpapermanufacturingsectors(fig.12.6).Wood-relatedmanufacturingcomprised10percentofallsouthernmanufacturingemployment(fig.12.7)and8percentofallsouthernmanufacturingincome(fig.12.8).Thiscomparestofoodmanufacturingwith13percentofemploymentand10percentofincome,andtextilesmanufacturingwith6percentofemploymentand4percentofincome(fig.12.7andfig.12.8).

Ofthethreewood-relatedmanufacturingsectors’employment,woodproductsmanufacturingisthelargestcomponent(47percentofwood-relatedemployment)andforestryandloggingisthesmallest(14percent)(fig.12.9).Thepapermanufacturingsector,however,providesamuchlargerproportionofwood-relatedincome(51percent)

300The Southern Forest Futures Project

reflectingthehigherwagesandmorefull-timeemploymentinthissector(fig.12.10).

Thedirectandtotalcontributionofthewood-relatedmanufacturingsectorswasalsoassessedusingtheIMPLAN(MicroImplanGroup,Inc.2010)input-outputmodel.ThethirteenSouthernStateswereaggregated,andthentheforestryandlogging,woodproductsmanufacturing,andpapermanufacturingsectorswereaggregated.Table12.1showsthedirectcontributionsofthesesectorstosouthernemployment,employeecompensation,wageandsalaryincome,totalvalueadded,andtotalindustryoutputin2009.Table12.2showsthetotalcontributionofwood-relatedmanufacturing,whichisthesumofthedirectcontributionplusthemultipliereffects,foreachsector.Fordetailsaboutthecalculationoftheseresults,seeAbtandothers(2002).UsingtheIMPLANdata,whichisderivedfromdifferentsourcesthantheBEAdata,wefoundthatthedirectcontributionofthewood-relatedmanufacturingsectorswasbetween0.6(employment)to1.4percent(totalindustryoutput)ofthesoutherneconomy.Thetotalcontributionofthesesectorsrangedfrom1.9percent(employment)to2.8percent(totalindustryoutput),withthetotalcontributiontoemployeecompensationandtotalvalueaddedinbetween.

TheU.S.travelandtourismsectorhasincreasedsince1990(fig.12.11)(GriffithandZermanek2009,KernandKocis2007).However,becauseacomparableanalysishasnotbeendonefortheSouthalone,andbecauseforest-basedrecreationcomprisesonlyaportionofthetotaltravelandtourismsector,wecannotdeterminepreciselywhatportionofjobsandincomeinthetourism-relatedsectorscanbeattributedtosouthernforest-basedrecreation.

logging

ConcernsoverashortageofloggershavebeenvoicedintheSouthformorethan50years(Pikl1960,WollfandNolley1977).Morerecently,surveysofloggersindicateincreasesinaverageage,areluctancetoencouragechildrentoenterthefield,andincreasingfinancialconcerns,allofwhichcouldsignalafutureshortageofloggers(BakerandGreene2008;EganandTaggart2004a,2004b;EganandTaggert2007;Luppoldandothers1998).Atthesametime,increasingmechanizationcouldleadtoreducedneedforloggersasmoreoftheworkisaccomplishedbymachinery.

Pastsurveyshaveindicatedthatinsurancewasaprimaryconcernforsustainabilityofloggingcompanies,butrespondentstomorerecentsurveysreportedthatfuelpricesandtimberpricesaremorecriticaltoday(BakerandGreene2008,MoldenhauerandBolding2009).Issuesthatwerenotreportedassignificantbarrierstosustainabilityincludetaxesandregulations(BakerandGreene2008)andtractsize

anddevelopment(Eganandothers2007,MoldenhauerandBolding2009).

Thefutureislikelytobringincreasingmechanizationandthesubstitutionofequipmentforjobsintheloggingsector.Thismechanization,aswellasregulationsandlaws,hasalsoledtoincreasedsafetyandlessstrenuouswork,whichmayservetomakeloggingamoreattractivecareerchoice.However,manycurrentloggersindicatethattheirpreferenceforloggingworkisderivedinpartfromthehard,physicalnatureofthework(EganandTaggart2004a,2004b);makingtheworksaferandeasiermightleadtofewer(ordifferent)newentrantsintothefield.

Althoughcurrentloggersreportthatwagesarelow,theydonotviewwageincreasesasapriority.However,economictheorywouldimplythatanincreaseinwageswouldresultinanincreaseinnumbersofloggers.Evenso,theriskynatureofboththeworkandthebusinessmaypreventasufficientnumberofworkersfromchoosingloggingasaprofession.Ifshortagesdooccur,othermarketsolutionsareexpected;forexample,arrangementscouldbemadebetweenwood-usingcompaniesandloggersthatcouldincludelong-termcontracts,immigrantlaborcontracts,loansforequipment,orothersolutions.

Thenationalprojectionshowsaslightincreaseinthenumberofloggingjobsandinoutputfortheloggingindustryin2018(Woods2009).ScalingthistotheSouthshowsincreasesof2percentinjobsand3percentinoutputfor2008to2018,reversingthetrendfrom1998to2008(fig.12.12).Thisincreaseisattributed,inpart,toaslightincreaseintheexpecteduseofwoodforenergy.IncomeperloggingjobintheSouthhasincreasedandnowsurpassesthenationalaverage(fig.12.13).Thisincreaseresultsfromacombinationofbothincreasinghourlywagesandincreasinghoursperjob(morefulltimeemployment).Beyondtheprojection(2018),weexpectthenumberofloggingjobstocorrelatestronglywithchangesinharvestlevels,whilealsocontinuingtorespondtotechnicalchangebydecliningasmechanizationcontinuestoincrease.

Wood Products manufacturing

Thesectorisstronglylinkedtothehousingmarket,andthedeclineinoutputandjobsfrom1998to2008(fig.12.14)reflectsthedeclineinhousingstartsduringthe2007recession(Woods2009).Asthehousingmarketrecovers,outputisexpectedtoriseby2.2percentthrough2018,buttechnicalchangeandachangeintheproductmixisexpectedtocauseemploymenttocontinuedecliningby8percent(fig.12.14).Thesevaluesweredownscaledfromthenationallaborforecasts(Woods2009)byproportioningthenationaltrendstotheSouth’sshareoftotaloutputandemploymentforthissector.

301chAPTeR 12. Employment and Income Trends and Projections for Forest-Based Sectors in the U.S. South

Table 12.1—Direct contributions of three wood-related sectors to employment, compensation, value added, and total industry output of the South in 2009, in millions of 2009 U.S. dollars and by percent of totals for the South

NAicS sector Sector name employment

employee compensation

Total value added

Total industry output

percentmillions

of 2009$ percentmillions

of 2009$ percentmillions

of 2009$ percent

131 Forestry and logging 57,676 0.10 1,454 0.06 3,776 0.09 9,613 0.12

321 Wood products manufacturing 145,936 0.26 6,468 0.27 10,168 0.25 28,065 0.34

322 Paper manufacturing 143,984 0.25 11,440 0.48 23,390 0.57 79,991 0.98

All wood-related manufacturing 347,596 0.61 19,363 0.81 37,333 0.92 117,668 1.44

Table 12.2—Total contribution of three wood-related sectors to employment, compensation, value added, and total industry output of the South in 2009, in millions of 2009 U.S. dollars and by percent of totals for the South

NAicS sector Sector name employment

employee compensation

Total value added

Total industry output

percentmillions

of 2009$ percentmillions

of 2009$ percentmillions

of 2009$ percent

131 Forestry and logging 137,461 0.24 4,104 0.17 9,000 0.22 19,350 0.24

321 Wood products manufacturing 348,001 0.61 15,180 0.63 26,803 0.66 58,474 0.72

322 Paper manufacturing 591,934 1.04 31,995 1.34 63,240 1.55 152,075 1.86

All wood-related manufacturing 1,077,396 1.89 51,279 2.14 99,044 2.43 229,900 2.82

305chAPTeR 12. Employment and Income Trends and Projections for Forest-Based Sectors in the U.S. South

(Woods2009).Anyrecoveryfromtherecessionismaskedbyoveralldeclinesinthissector.DownscalingtheseforecaststotheSouthresultedinprojecteddeclinesof26percentinjobsand14percentinoutput(fig.12.15).ThislargerdeclineinjobsinboththeUnitedStatesandtheSouthinthepapersectorrepresentsexpectationsofcontinuedtechnicalchangeinvolvingthesubstitutionofcapitalforlabor.

Forest-Based Recreation

ForestsintheSouthareusedforavarietyofrecreationalopportunities,rangingfromwhitewaterkayakingtonaturestudy.Forest-basedrecreationisnotrecordedasasingleeconomicsector,butisinsteadpartofseveralsectors,includingtransportation,entertainment,accommodations,sportinggoodsmanufacturing,andeatinganddrinkingplaces.Thisisalsotrueforoveralltravelandtourism,whereexpendituresarerecordedinothersectors,butthenconsolidatedandtrackednationallyasaseparateaccount(GriffithandZemanek2009,KernandKocis2007).Forest-basedrecreationisexpectedtobeonlyapartofthismuchlargertravelandtourismsector.

Inaseparatechapterinthisstudy,Bowkerandothers(2013)developedprojectionsforforest-basedrecreationparticipationbysouthernresidents.Theyconcludedthatpercapitaforest-basedrecreationwouldstayfairlyconstantformostactivities,whiledecliningslightlyforhunting,fishing,andmotorizedoff-roadactivities.Thiscontrastswiththeprojectionsfornationalforests,wherethepercapitarateofrecreationvisitsdeclinesforallactivities.Theirchapteralsoshowsthatnationalforestpercapitarecreationvisitsareexpectedtodeclinemoreforovernightandgeneralvisitsthanfordayusedevelopedvisits.Further,theyconcludethatrecreationpressuresarelikelytoincreaseproportionatelymorenearurbanareas.Aseparatestudyshowsthatexpenditurespervisitperpartyarethreetofourtimeshigherforovernightvisitsthanfordayvisits,andare40to80percenthigherfornon-localvisits(StynesandWhite2006).Theseresults,takentogether,providesome,althoughweak,supportforsomewhatlowerpercapitaexpendituresonforest-basedrecreationintheSouth,resultinginforest-basedrecreationbecomingasmallerpartoftotaltravelandtourismexpendituresinthefuture.Expenditures,andthusoutput,areexpectedtogrow,however,althoughbelowtherateofpopulationgrowth,whichwillreducethepercentageoftheeconomyderivingfromforest-basedrecreation.

Alternatively,wecouldassumethattheprojecteddemandforforest-basedrecreationalignswiththedemandforalltravelandtourismandthattheSouthfollowsthenationaltrends.Inthiscase,forest-basedrecreationtotalindustryoutputin

theSouthwouldincreaseslightlythrough2018.Eventhissmallincreaseinoutput,however,willlikelynotkeepjobsintourism,andthusinforest-basedrecreation,fromrisingatarateslowerthantherateofriseinoutput.Eventheservice-basedsectorsintravelandtourismhaveexperienced,andareexpectedtocontinuetoexperience,technicalchangethatreducesthejobsevenifoutputweretostaythesame.Franchising,low-serviceaccommodations,self-andlow-servicerestaurants,andcentralofficesformanagementandmarketingareallexpectedtoreducelabordemandinthetravelandtourismsectors(GriffithandZemanek2009,Woods2009).

Bioenergy

SmallamountsofwoodarecurrentlyusedtoproduceliquidtransportationfuelsorelectricityintheSouth,althoughthereisapotentialforsignificantincreasesinoneorbothoftheseusesofsouthernwoodinthenearfuture,dependingonpoliciesandmarkets.Inthischapter,wediscussthepotentialforchangesinjobsandoutputthatmightresultfromanincreaseintheuseofwoodforenergyandpreviousliteratureinthisarea.

Introductionofpoliciestoreducetheamountofcarbonintheatmosphere(includingFederalandStaterenewablefuelstandardsandrenewableelectricitystandards)ortheimpositionofacarbontaxorcarboncap-and-tradecouldshiftproductionofenergytorenewablesources,includingwood.Thus,economictheorywouldimplythatoutputandjobsintheconventionalliquidfuelsandconventionalelectricitysectorswoulddecrease,withanoffsettingincreaseinoutputandjobsinthebioenergysectors,allotherthingsheldconstant.Thismeansthatincreasesinthedemandfornon-renewableenergycouldleadtoincreasesinoutputandjobsintheconventionalliquidfuelsandelectricitysectors,providedthattechnologyisheldconstant.Ifmarketsfailtoaccountforthecostsofcarbondisposaltotheatmosphereandifallotheraspectsoftheeconomyareheldconstant,weexpectthatanyimpositionofnewstandardsandregulationswouldcauseanoveralldecreaseinoutputandjobsintheeconomy(Huang2010).

Allofthestudiesconductedtodateindicatethateconomicactivity(includingoutputandjobs)willincreaseintheloggingsector.Theseincreasesarelikelyattheexpenseofjobsandoutputinthecoal-miningsector,whichisoftenexcludedfromthesmallerregionalanalyses(Englishandothers2009,Faaijandothers1998,GanandSmith2007,Hodgesandothers2010,Perez-Verdinandothers2008).Dependingonthevariationsinwageratesandinfull-time/part-timeemploymentrates,netjobsmaybeincreasedordecreasedslightlyasaresultofbioenergy-feedstock

306The Southern Forest Futures Project

procurementpolicies.Inthebioenergysector,jobsandoutputareexpectedtoincrease,withacorrespondingdecreaseinjobsandoutputintheconventionalenergysector(Huang2010,Hodgesandothers2010,Winston2009).

Previousstudiesoftheconversiontobioenergytypicallyuseeitheracomputablegeneralequilibriummodeloraninput-outputmodeltoevaluatetheimpactsonjobsandoutput.Input-outputmodelsaresimpleandrichindata,providingasnapshotoftheeconomyandclearlyilluminatingthelinkagesamongsectorsinthesystem.Computablegeneralequilibriummodels,oftenusingthedatadevelopedfortheinput-outputmodels,aremorecomplexandcanprovideeitherasnapshotoradynamicviewoftheeconomy.Althoughtheyhavetheadvantageofallowinginputsubstitutiontoadjustovertime,theircomplexityoftenmakesexplainingresultsandoutcomesdifficult.

Inthedevelopmentofinput-outputandcomputablegeneralequilibriummodels,thedesignationoftheregionsofimportancehasasignificanteffectonoutcomes:thesmallertheregionthegreaterthelikelihoodofexcludingareaswherelosseswouldoccur,whileincludingareaswheregainswouldoccur.Input-outputmodelsmayalsooverstateimpactsbecausedynamicadjustmentisnotpartofthemodelingframework.Englishandothers(2009),Faaijandothers(1998),GanandSmith(2007),andPerez-Verdinandothers(2008)allconductedstudiesinStates,regions,orcountrieswithoutcoal,andthusdonotaddressthenegativeeffectsoncoalmining.Manyofthesestudiesalsofailtoaccountforthenegativeeffectsofbioenergyproductionontheconventionalelectricitysector.OnlyEnglishandothers(2009)addressthenegativeeffectsthatautilityrateincreasewouldhaveonhouseholds.Forecastsofincreasedeconomicactivityfromtheconversiontobioenergyresultfromsomeorallofthefollowing:(1)largemultipliereffectsfromincreasesinbioenergyfeedstockproduction,aswellasincreasesinpowerandfuelproduction;(2)smallermultipliereffectsfromcoststohouseholds;(3)analysisofsmallregionsthatmaynotfullycaptureeffectsonsectorssuchascoalmining;and(4)excludingthecoalfeedstock,conventionalpowerandfuelsectors.Theincompletenatureoftheseanalyseslimitstheirusefulnessinevaluatingeconomy-wideeffectsofaconversiontobioenergyorindeed,anyrenewableenergy,fromconventionalenergy.

Computablegeneralequilibriummodelstypicallyincludetheeffectsonhouseholds(increasingutilityandfuelcosts),conventionalenergyproviders,wood-productscompanies(increasingwoodcosts),andbioenergyproviders(Hodgesandothers2010,Huang2010,Winston2009).Thesestudiespredictlossestoconventionalenergyprovidersandhouseholds,gainstobioenergyproviders,andvaryingeffectsonthewood-productssector.Onereasonforthediscrepancyinthewood-productspredictionsmaybeHuang’s(2010)assumptionofalargeincreaseinbiofuels,whichmayexceed

themodel’sabilitytocorrectlyrepresentthesectors.Huangprovidesnoexplanationforthecounterintuitiveresultsthatsawmilloutputandjobsincreasewhencellulosicethanolproductionincreases,orthatjobsdecreaseandoutputincreasesforwoodyelectricitywithimplementationofthebioelectricitypolicies.Hodgesandothers(2010)showsmallincreasesineconomicactivitywhileHuangshowssmalldecreases.Asthesestudiesusethesamemodelanddata,onepossibleexplanationfordiscrepanciesisthegeographicscaleoftheiranalysesasHuanganalyzesthesoutheastwhileHodgesandothersanalyzeonlyFlorida.

Themostcompletestudies,Hodgesandothers(2010)andHuang(2010),indicatesmallfuturechangesoverall(reductionsinconventionalsectorsandincreasesinthebioenergysector)withthechangesoccurringinthepowersectors.FortheSouth,economictheorywouldimplyanincreaseinloggingjobsandoutput,whichmaybeoffsetatlargerregionalandnationallevelsbydeclinesincoalproductionandtransportbutwouldnonethelessprovideincreasesinlocaljobsandincome.Dependingonthespecificpoliciesimplemented,competitionforwoodbetweentraditionalwood-usingcompaniesandbioenergycompaniesmayincreasewoodcostsandthusdecreasejobsandoutputinthetraditionalsectors,althoughthesechangeswilllikelybemaskedbylargerstructuralchangesinthewoodproductsandpapermanufacturingsectors.Finally,ashifttobioenergyonalargescalewouldrequiretheconstructionoffacilitieswithaccompanyinggrowth,albeittemporary,injobsandincome.Itisunclearhowmuchofthisconstructionwillsubstitutefordecreasesinconstructionand/ormaintenanceofconventionalenergyfacilities.

DiScuSSioN AND coNcluSioNS

Thefutureofforest-relatedjobsandincomeintheSouthisuncertain.Forecastingiscomplicatedbylargerecentchangesinthesesectors,combinedwiththeeffectsofthe2007–09recessionandthepotentialforbioenergy.Theloggingsectorisexpectedtorespondtochangesinthedemandfortimberproductsatpapermills,sawmills,andbioenergyplants.Unknownsincludehowtheevolutiontoamorehighlymechanizedandlessfamily-firmorientedsectorwillaffecttimberproduction.ShortagesofworkershavebeennotedinMaine,althoughcontractloggersfromCanadahavereadilyfilledthevoid.Concernisfrequentlyvoiced,butshortageshavenotbeendocumented.

Thewoodproductsmanufacturingsector,whichincludessawmills,isexpectedtorecovertopre-recessionlevelsofoutput,althoughjobsperunitofoutputislikelytocontinuetodeclineduetotechnicalchange,whichwillinfluenceoverallsectoremployment.Beyondthenextdecade,wedonotknowpreciselyhowwoodwillcontinuetobeusedinhousing,orhowtechnicalchangewillaffecttheproductionprocess.

307chAPTeR 12. Employment and Income Trends and Projections for Forest-Based Sectors in the U.S. South

Thepapermanufacturingsectorisexpectedtocontinuetocontractslightly,evenafterrecoveringfromtherecession.AreductioninfinepaperproductionintheSouthanddecliningoveralldemandforvirginpaperarelikelytoreduceoutput.Andcontinuedtechnicalchangeislikelytofurtherreduceemploymentinthissectoroverthenextdecade.

Futurechangesinjobs,income,andoutputderivingfromforest-basedrecreationintheSouthwilldependonchangesinthedemandforrecreationandtheleveloftechnicalchangeintheservicesector.Recreationdemandisapositivefunctionofpopulationandincome,soincreasesinthesefactorswouldbeexpectedtoleadtoincreasesinjobsandincomeinthesectorsthatproviderecreationservices.However,itislikelythatforest-basedrecreationwillincreaseatrateslowerthantherateofincreaseinpopulation.

Considerableuncertaintysurroundsthepotentialforwooduseinbioenergy,includingthesuccessofcommercialconversiontechnologiesforcellulosicethanol,policyrequirementsforrenewableenergy,carbonemissionscontrolschemes,andeventhefutureemploymentandoutputprofilesofspecificactivitiessuchasco-firingandethanolproduction.Understandardeconomictheory,implementationofpoliciestocorrectanonmarketexternality,suchasunpricedcarbonemissions,wouldbeexpectedtoleadtoshort-runmonetarylossesinaneconomy.Bysector,anincreaseinwooduseforbioenergycouldleadto(1)increasesinloggingaccompaniedbydecreasesincoalmining,(2)increasesinbioenergyproductionaccompaniedbydecreasesinconventionalenergyproduction,(3)decreasesinhouseholdincomebecauseofincreasesinelectricityandfuelcosts,(4)increasesinconstructionactivity,and(5)apotentiallossintraditionalwoodproductssectorsifincreaseddemandfortimberresultsinhighertimbercosts.

kNoWleDGe AND iNFoRmATioN GAPS

Considerableinformationislackingintheliteratureandinthedatathatcomplicatethedevelopmentofindustryandemploymentforecastsfortheforest-basedsectors.Thebioenergysectorisnewandcurrentlyuntrackedinnationaldataasadistinctsectorandthusislackinghistoricaldata.Asinanydevelopingindustry,technologiesandindustrystructuresarelikelytochangesignificantlyoverthenextdecade.Andthisassumesthebioenergysectordoesdevelop—thereisachancethissectorwillnotbecomeamajorwooduser.Interactionsbetweenexistingsectorsandthisnewsectorarealsounknown.

Assessingthefutureofemploymentandoutputintheforest-basedrecreationsectorislikewisehamperedbythelackofdata,althoughthisisneitheranewnordevelopingsector.Theonlydataavailableonforest-basedrecreationarecollectedbyindividuallandmanagementagencies.

Forexample,theNationalVisitorUseMonitoringSurveyconductedbytheU.S.ForestService(StynesandWhite2006),collectsinformationonrecreationalactivitiesonnationalforestsonlyandacomparablestudyisnotavailableforprivate-andState-ownedforest-basedrecreation.

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