Optimizing the Wood Value Chain in Northern Norway Taking Into Account National and Regional Economic Trade-Offs

Abstract

As a consequence of past decades of extensive afforestation in Norway, mature forest volumes are increasing. National forestry politics call for sustainable and efficient resource usage and for increased regional processing. Regional policies seek to provide good conditions for such industries to be competitive and to improve regional value creation. We demonstrate how methods from operations research and regional macro-economics may complement each other to support decision makers in this process. The operations research perspective is concerned with finding an optimally designed wood value chain and an aggregated planning of its operations, taking a holistic perspective on strategic-tactical level. Using Input-Output analysis methods based on statistics and survey data, regional macro-economics helps to estimate each industry actor’s value creation and impact on society beyond immediate value chain activities. Combining these approaches in a common mathematical optimization model, a balance can be struck between industry/business and regional political interests. For a realistic case study from the northern part of coastal Norway, we explore this balance from several perspectives, investigating value chain profits, economic ripple effects and regional resource usage.