Modeling an integrated market for sawlogs, pulpwood and forest bioenergy

Traditionally, most applications in the initial stage of forest supply chain deal with sawlogs to sawmills, pulpwood to pulp or paper mills and forest residues to heating plants. However, in the past decades, soaring prices of fossil fuel, global awareness about CO2 emission and increasing attention to domestic resource security have boosted the development of alternative renewable energy, among which forest bioenergy is the most promising and feasible choice for medium- and large-scale heating and electricity generation. Different subsidies and incentive policies for green energy further promote the utilization of forest bioenergy. As a result, there is a trend that pulpwood may be forwarded to heating plants as complementary forest bioenergy. Though pulpwood is more expensive than forest residues, it is more efficient to transport and has higher energy content. The competition between traditional forest industries and wood-energy facilities, expected to grow in the future, is very sensitive for the forest companies as they are involved in all activities. In this paper, we develop a model that all raw materials in the forest, i.e. sawlogs, pulpwood and forest residues, and byproducts from sawmills, i.e. wood chips and bark, exist in an integrated market where pulpwood can be sent to heating plants as bioenergy. It represents a multi-period multi-commodity network planning problem with multiple sources of supply, i.e. pre-selected harvest areas, and multiple kinds of destination, i.e. sawmills, pulp mills and heating plants. The decisions incorporate purchasing the raw materials in harvest areas, reassigning byproducts from sawmills, transporting those assortments to different points for chipping, storing, wood-processing or wood-fired, and replenishing fossil fuel when necessary. Moreover, different from the classic wood procurement problem, we take the unit purchasing costs of raw materials as variables, on which the corresponding supplies of different assortments linearly depend. With this price mechanism, the popularity of harvest areas can be distinguished. The objective of the problem is to minimize the total cost for the integrated market including the purchasing cost of raw materials. Therefore, the model is a quadratic programming (QP) problem with a quadratic objective function and linear constraints. A large case study in southern Sweden under different scenario assumptions is implemented to simulate the integrated market and to study how price restriction, market regulation, demand fluctuation, policy implementation and exogenous change in price for fossil fuel will influence the entire wood flows. Pair-wise comparisons show that in the integrated market, competition for raw materials between forest bioenergy facilities and traditional forest industries pushes up the purchasing costs of pulpwood. The results also demonstrate that resources can be effectively utilized with the price mechanism in supply market. The overall energy value of forest bioenergy delivered to heating plants is 23% more than the amount in the situation when volume and unit purchasing cost of raw materials are fixed.Forest supply chain; integrated market; bioenergy; wood procurement; wood distribution; quadratic programming

An educational game in collaborative logistics

We describe an educational game in collaborative logistics. The game is based on an award-winning application in cost allocation in transportation. The purpose of the game is to acquire an understanding of negotiation, coalition building, and cost/profit sharing when the players have different powers and hold different levels of information. The game is played with each player representing a single company. The challenge for the players is to find an efficient coalition and to share the benefits and costs of the collaboration. We describe the underlying case study, review basic concepts in game theory, outline the teaching case, and discuss experiences from running the game in several countries and with students in business, engineering, and forestry

Searching for optimal integer solutions to set partitioning problems using column generation

We describe a new approach to produce integer feasible columns to a set partitioning problem directly in solving the linear programming (LP) relaxation using column generation. Traditionally, column generation is aimed to solve the LP relaxation as quick as possible without any concern of the integer properties of the columns formed. In our approach we aim to generate the columns forming the optimal integer solution while simultaneously solving the LP relaxation. By this we can remove column generation in the branch and bound search. The basis is a subgradient technique applied to a Lagrangian dual formulation of the set partitioning problem extended with an additional surrogate constraint. This extra constraint is not relaxed and is used to better control the subgradient evaluations. The column generation is then directed, via the multipliers, to construct columns that form feasible integer solutions. Computational experiments show that we can generate the optimal integer columns in a large set of well known test problems as compared to both standard and stabilized column generation and simultaneously keep the number of columns smaller than standard column generation

Sustainable forest management using decision theaters : rethinking participatory planning

Involving stakeholders in the decision-making process can be very complex and time consuming. Decision theater (DT), which enables the combination of visualization and decision modeling capabilities together with human capacity of insight and interaction, is proposed for addressing this challenging problem in the forest sector. A generic framework for designing DTs to support participatory planning in the forest sector is proposed. To enable DT implementation and support decision-making in the DT in the province of Québec, Canada, the conceptual design of a decision-support system called Forest Community-DSS (FC-DSS) has been developed. Implementing FC-DSS along with other technologies in a DT environment can contribute to engage the stakeholders in the decision-making process by increasing participation frequency, collecting more inputs from the stakeholders, supporting the development and evaluation of alternative options and the selection of preferred alternatives. A DT-based collaboration approach would contribute to address the multiple issues of the stakeholders involved in participatory planning in Québec. Other Canadian provinces and other countries facing similar issues can benefit from the proposed approach

Business Models for Collaborative Planning in Transportation: an Application to Wood Products

In this paper, we propose a framework to describe collaboration in transportation. Then, we discuss the strategic, tactical, operational and real-time transportation planning decisions and raise issues about implementing collaborative decision processes. Also, we provide a literature review of transport decision-support systems that use collaborative planning in the wood fiber flow chain in forestry. Finally, we propose a typology of different business models associated with collaboration in transpor

Business models for collaborative planning in transportation : an application to wood products

In this paper, we propose a framework to describe collaboration in transportation. Then, we discuss the strategic, tactical, operational and real-time transportation planning decisions and raise issues about implementing collaborative decision processes. Also, we provide a literature review of transport decision-support systems that use collaborative planning in the wood fiber flow chain in forestry. Finally, we propose a typology of different business models associated with collaboration in transport

How reserve selection is affected by preferences in Swedish boreal forests

It is important to consider the preferences of the various stakeholders involved when evaluating effective reserve selection, since it is largely their preferences that determine which of a given set of potential reserve networks that actually is "the best". We interviewed eight conservation planners working at the county administrative boards in each of the eight administrative counties covering boreal Sweden to establish weightings for different structural biodiversity indicators by using the Analytic Hierarchy Process (AHP). The subjective weightings were applied in a reserve selection model based on a goal programming (GP) approach. The structural indicators were derived from the Swedish National Forest Inventory (NFI) and used as proxy for biodiversity potential. A biodiversity indicator score, based on the values of those indicators, was maximized. The model adjusted this score ensuring that all indicators were represented in the selection, and further also adjusted the influence of the indicators based on the subjective weightings. We evaluated the GP approach by comparing it to a simple linear programming (LP) formulation, only maximizing the indicator richness. In all cases the model was limited either by a budget or an area. The biodiversity potential in young forests are often neglected within present conservation policies, however, the proportion of selected forest under 15 years was relatively high in all our cost-effective cases, varying between 32% and 60% using the individual planners subjective weightings, compared to 80% when using a simple LP model. The proportion of selected forest over 100 years varied between 69% and 85% in the area-effective cases using the subjective weightings, compared to 80% when using a simple LP model. Middle-aged forest was not favored in any of the selections, although they make up a substantial part of the total area. We conclude that there are differences in how conservation planners prioritize the indicators, and depending on how specific biodiversity indicators are weighted the age distribution of the selected reserves differs. This demonstrates the importance of considering how to establish appropriate weightings. It is also important to consider the, at least in our case, substantial difference in how common the different indicators are to ensure that the weightings get their intended impact on the selections. (C) 2014 The Authors. Published by Elsevier B.V. All rights reserved

Considering future potential regarding structural diversity in selection of forest reserves

A rich structural diversity in forests promotes biodiversity. Forests are dynamic and therefore it is crucial to consider future structural potential when selecting reserves, to make robust conservation decisions. We analyzed forests in boreal Sweden based on 17,599 National Forest Inventory (NFI) plots with the main aim to understand how effectiveness of reserves depends on the time dimension in the selection process, specifically by considering future structural diversity. In the study both the economic value and future values of 15 structural variables were simulated during a 100 year period. To get a net present structural value (NPSV), a single value covering both current and future values, we used four discounting alternatives: (1) only considering present values, (2) giving equal importance to values in each of the 100 years within the planning horizon, (3) applying an annual discount rate considering the risk that values could be lost, and (4) only considering the values in year 100. The four alternatives were evaluated in a reserve selection model under budget-constrained and area-constrained selections. When selecting young forests higher structural richness could be reached at a quarter of the cost over almost twice the area in a budget-constrained selection compared to an area-constrained selection. Our results point to the importance of considering future structural diversity in the selection of forest reserves and not as is done currently to base the selection on existing values. Targeting future values increases structural diversity and implies a relatively lower cost. Further, our results show that a re-orientation from old to young forests would imply savings while offering a more extensive reserve network with high structural qualities in the future. However, caution must be raised against a drastic reorientation of the current old-forest strategy since remnants of ancient forests will need to be prioritized due to their role for disturbance-sensitive species

Timber selling policies using bundle-based auction : the case of public forests in Québec

In the province of Québec, the government provides 25% of the volume of timber that is annually cut in crown forests through sealed-bid one-winner auctions. It was noted that many offers are made for some areas but few or none are made for many other areas. As such, a significant number of the timber volumes remains unsold. However, the combination of areas to form bundles can provide economy of scale that is not seen otherwise. We highlight some issues regarding the current allocation system and we analyse the effectiveness of different bundling systems in maximizing government revenues and enhancing bidders' competitiveness. We use actual forest data to evaluate different rules and strategies for the creation and allocation of partial and full bundles. Our results suggest that the use of the option of bundling forests areas makes the auction process more beneficial to the majority of stakeholders: Government revenues are increased; the bidding companies are more likely to obtain the desired volumes and pay less for harvesting and equipment relocation; and greenhouse gas emissions are reduced

A strategic forest management model for optimizing timber yield and carbon sequestration

Strategic forest management planning models designed to maintain existing carbon stocks and maximize capacity for future sequestration can help identify underused opportunities to increase carbon stocks without diminishing other forest products. This study proposed a carbon stock unit that allows summing up the stocks in the different forest pools even if the decomposition far exceeds the planning horizon. This unit is used to integrate the methods and algorithms from the Carbon Budget Model of the Canadian Forest Sector (CBM-CFS3) model into a wood supply model. The resulting model could be used to predict changes in carbon stocks, transfers between carbon pools, and greenhouse gas emissions that would result from every forest management activity. We tailored this model to meet different strategies: maximizing carbon storage in the forest, maximizing high-sustained timber yield, and achieving the dual objectives of yield and carbon storage. A range of management scenarios were simulated using the data of a 485,000 hectares mixed-wood forest in Quebec, Canada. Our results demonstrate that, with the reduction in the harvest rates, the increase in the ecosystem carbon storage is insufficient to offset the carbon losses associated with the increase in the harvest rates. Study Implications: In this article, we adopt the perspective of forest managers who contend that removing lumber from the forest can be achieved in a responsible way or in a way that does not affect the carbon stocks in the forest in the long term. We propose a model that integrates methods and algorithms from the CBM-CFS3 model to simulate carbon dynamics of aboveground and belowground biomass and dead organic matter, including soils. The model can be used to predict carbon storage potential within a forest region assuming a given management strategy. We used data of a large forest area to develop a number of sophisticated scenarios of strategic forest planning. Our results are consistent with the forest managers’ contentions. When carbon was maximized regardless of volume, the increase in the ecosystem carbon storage was insufficient to offset the carbon losses associated with the reduction in the harvest rates