In 1991 the South Carolina Forestry Association commissioned a
large study of the state forestry industry. A number of economists
at the University of South Carolina contributed to the overall study.
IMS Quantum was engaged to build an Integrated Planning Model of the
major aspects of the industry to show the quantitative relations between
the different sectors.
The model was divided into four major parts: the forest resource
base, the logging sector, lumber sawmills, and wood products. A
final section that included Critical Variables and Measures of
Performance was developed to allow policy planners to try a number
of scenarios and quickly view the consequences.
The forest resource base included a section on property taxes
that yielded a weighted-average tax per acre of timberland. Resource
estimates were made for hardwood and softwood including both pulpwood
and sawtimber. Each estimation included total acreage, lost acreage
under a series of special designations, a set of valuation parameters
including growth rates, harvest rates, stumpage values, and discount
rates. A discounted value of timberland assuming a fixed price
(effectively a zero elasticity of demand) was then computed on a
sustained yield basis. In addition, a discounted value of timberland
was then computed based on a resource reduction due to Hurricane Hugo.
Thus the model computed a discounted value of lost timber for each resource.
The logging sector model included wage parameters, tax rates, and
delivered timber prices. The production function took inputs from the
resource section of the model and applied recovery percents to compute
production volumes of each resource type. Delivered prices were applied
to production volumes to yield revenues from each resource sector.
An income statement for the entire logging sector was generated that
calculated total income as well as costs per unit of production. The
model was designed to show the comparison of a Base Case to a New
Case chosen by those examining forestry policy alternatives.
The lumber sawmill section was set up in the same way as the
logging section with the inputs coming from the logging sector
and the outputs going into the wood products sector. Each of the
six wood product categories were set up to compute net income after
taxes based on the value of shipments, the costs of inputs, wages
IMS Quantum specializes in developing Integrated Planning Models
that show how an understanding of the details of complex interrelated
industries can be the basis of more consistent policy planning by
government or better corporate strategic planning by participants
in the marketplace.