Factors affecting sawnwood consumption in Europe Elias Hurmekoski a,b, ⁎, Lauri Hetemäki a,b , Mika Linden c a European Forest Institute (EFI), Foresight and Policy Support Programme, Yliopistokatu 6, 80100 Joensuu, Finland b University of Eastern Finland (UEF), School of Forest Sciences, Yliopistokatu 7, 80111 Joensuu, Finland c University of Eastern Finland (UEF), Department of Law, Yliopistokatu 2, 80100 Joensuu, Finland abstract article info Article history: Received 11 February 2014 Received in revised form 9 July 2014 Accepted 13 July 2014 Available online xxxx Keywords: Coniferous sawnwood Consumption per capita Demand modeling Europe PESTE analysis Structural change Recent significant changes in the sawnwood consumption per capita in some European countries raise the ques- tions, whether similar changes could happen in other countries as well, and if so, driven by what? The objective of this study is to identify potential factors affecting the level and growth rate of sawnwood consumption in Europe. Econometric models with sawnwood consumption per capita as the dependent variable are estimated for 17 European countries for the period of 1980–2012. The per capita form normalizes the data in regard to the size of the markets, and therefore makes the data more comparable across countries and over time. The results indi- cate that the sawnwood consumption per capita is related to construction activity, income, and prices. However, the results point to large regional differences in the drivers of sawnwood consumption across Europe. Moreover, in densely forested and scarcely populated regions, there have been structural changes that may have been caused by changes in the market share of sawnwood in the construction markets, which the models measuring economic activity are unable to capture. © 2014 Elsevier B.V. All rights reserved. 1. Introduction 1.1. Background The sawnwood sector has large significance for many regional economies in Europe. In the EU27, the sawnwood industry employed 250,000 people and produced a turnover of around 32 billion euros in 2010 (Eurostat, 2013: Nace R2 C161). Moreover, the developments of the sawnwood markets also affect the prices and supply flows for the other large scale forest-based industries, such as pulp, wood-based panels, and bioenergy markets (Lundmark, 2007). Given the importance of the sector, there has been surprisingly little empirical research on the European sawnwood market developments in the 21st century. The few examples include Simangunsong and Buongiorno (2001), Baudin (2003), Flinkman (2003), Kangas and Baudin (2003), Hetemäki et al. (2004), Mutanen and Toppinen (2005), Mutanen (2006), Sauquet et al. (2011), and Jonsson (2010, 2013). The economic crisis caused the European sawnwood markets to plunge in 2008 and the markets have continued to stagnate for several years. Moreover, historical trends and major long-term demographic and economic indicators do not seem to support strong growth for sawnwood demand in Europe in the future either. On one hand, the number of households may increase, due to the declining number of people living in a household (Jonsson, 2011). However, on average, the European population is projected to be stagnating towards 2050 (UN, 2013). Moreover, the population in the Western world is forecast to continue to age and urbanize, thus reducing the demand for wood in construction (UN, 2012, 2013). Also, the economic growth is expected to be sluggish in Europe in the coming decades (OECD, 2012). The European sawnwood markets could be characterized as path dependent in that the construction sector that accounts for the most of the sawnwood consumption has shown few changes away from tra- ditional building practices (see also Mahapatra and Gustavsson, 2008). Similarly, the sawnwood consumption patterns do not seem to have been converging between regions (Buongiorno, 2009). Given the above trends and the industry characteristics, major increase in the use of sawnwood would seem to require changes in the consumption patterns, i.e. in the level of consumption per capita (CPC). Indeed, while the aggregate level statistics for the European Union show little changes in the sawnwood CPC over the past decades, in some countries major changes have occurred. For example, in Finland the sawnwood CPC approximately doubled over the period of 1995 to 2000, yet it has plummeted back to the level of 1995 after the peak in 2007 (see Fig. 1). Hetemäki et al. (2011) argue that the increase may have been due to inter alia public promotion campaigns, government platforms (which seek to enhance wood building), technology plat- forms (e.g. open construction system), removing institutional obstacles of wood-frame construction (e.g. revising fire regulations and building standards), and successful examples (e.g. modern wood cities). The difference between the aggregate and country level develop- ments depicted in Fig. 1 raises the question, if the determinants of Forest Policy and Economics xxx (2014) xxx–xxx ⁎ Corresponding author at: European Forest Institute (EFI), Foresight and Policy Support Programme, Yliopistokatu 6, 80100 Joensuu, Finland. Tel.: +358 503468203. E-mail addresses: elias.hurmekoski@efi.int (E. Hurmekoski), lauri.hetemaki@efi.int (L. Hetemäki), mika.linden@uef.fi (M. Linden). FORPOL-01169; No of Pages 13 http://dx.doi.org/10.1016/j.forpol.2014.07.008 1389-9341/© 2014 Elsevier B.V. All rights reserved. Contents lists available at ScienceDirect Forest Policy and Economics journal homepage: www.elsevier.com/locate/forpol Please cite this article as: Hurmekoski, E., et al., Factors affecting sawnwood consumption in Europe, Forest Policy and Economics (2014), http:// dx.doi.org/10.1016/j.forpol.2014.07.008