Journal of Forest Economics > Vol 34 > Issue 3-4

Evaluating Potential Sources of Aggregation Bias with a Structural Optimization Model of the U.S. Forest Sector

Chrisopher M. Wade, RTI International, USA, chwade@rti.org Justin S. Baker, RTI International, USA, Greg Latta, University of Idaho, USA, Sara B. Ohrel, Environmental Protection Agency, USA,
 
Suggested Citation
Chrisopher M. Wade, Justin S. Baker, Greg Latta and Sara B. Ohrel (2019), "Evaluating Potential Sources of Aggregation Bias with a Structural Optimization Model of the U.S. Forest Sector", Journal of Forest Economics: Vol. 34: No. 3-4, pp 337-366. http://dx.doi.org/10.1561/112.00000503

Publication Date: 13 Nov 2019
© 2019 C. M. Wade, J. S. Baker, G. Latta and S. B. Ohrel
 
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In this article:
1. Introduction
2. Literature Review
3. Data and Methods
4. Results and Discussion
5. Conclusions
References

Abstract

Structural economic optimization models of the forestry and land use sectors can be used to develop baseline projections of future forest carbon stocks and annual fluxes, which inform policy dialog and investment in programs that maintain or enhance forest carbon stocks. Such analyses vary in terms of the degree of spatial, temporal, and activity-level aggregation used to represent forest resources, land cover, and markets. While the statistical and econometric modeling communities widely discuss the effects of aggregation bias and have developed correction techniques, there is limited prior research investigating how aggregation bias may affect structural optimization models. This paper explores potential aggregation bias using the Land Use and Resource Allocation model (LURA), a detailed spatial allocation partial equilibrium model of the U.S. forest sector. We ran a series of projections representing alternative aggregation approaches including averaging forest stocks at plot, county, state, and regional levels, across one-, five, or ten-year age classes, and by two or fourteen forest types. We compared the resulting projections of forest carbon stocks and harvesting activities across each aggregation scenario. This allows us to isolate the effect of aggregation on key variables of interest (e.g., GHG emissions and supply costs), while holding all other structural characteristics of the modeling framework constant. We find that age-class and forest type aggregations have the greatest impact on modeling results, with the potential to substantially impact market and greenhouse gas projections. On the other hand, spatial aggregation has a small impact on national carbon stock projections. Importantly, regional results are greatly impacted by different aggregation approaches, with projected regional cumulative carbon stocks differing by more than 25% across scenarios.

DOI:10.1561/112.00000503

Companion

Journal of Forest Economics, Volume 34, Issue 3-4 Special issue - State of the art methods to project forest carbon stocks: Articles Overiew
See the other articles that are part of this special issue.