Effects of the Change of Harvesting Profit Induced by the Increase of Wood Use for Biomass Fuels on the Annual Supply and Minimal Expense for Subsidy

Abstract

The increase of wood use for biomass fuels in heat supply and power generation may change the yield rate, average price of the yield and costs of harvesting and transportation, thereby changing the profitability of forestry. In this study, we analyzed the effect of these changes on the annual supply and annual expense of the government for the subsidization. With a fixed maximal subsidy rate or fixed governmental expense for subsidy, an improvement of forestry profitability increases the annual supply as a result of an increase of stands that can be managed for wood production with the subsidy. The increase of yield rate causes a larger increase rate of annual supply because of both the direct increase of the yield and the improvement of the profitability. If the maximal subsidy rate is fixed, the governmental expense may increase due to the increase of subsidized stands. With a fixed annual yield, the improvement of the profitability reduces the governmental expense. In this case, the annual regeneration is also reduced with the improvement of profitability, because high-quality stands tend to be selected for subsidization.