Exploring causal linkages between sustainable forest ecosystem management and technological progress in Canadian logging industries

Abstract

Logging poses socioeconomic, ecological, and environmental dilemmas. On the one hand, it plays a significant role in sustaining the forest sector’s contributions to the national economy. On the other hand, however, logging operations are major causes of ecological and environmental damages. It was hypothesized that if timely investments in various silvicultural operations were made to restore ecological integrity disturbed by logging operation, if the guiding principles of sustainable forest ecosystem management were strictly upheld, and if public and private investments in research and development were made, with a view to realize technological progress in the forest sector, then logging operations would be technically and economically efficient, firms in each regional industry would have comparative cost advantages in the marketplace, and the adverse effects of logging operations on ecological integrity would be socially, economically, and environmentally tolerable, all reflected through total factor productivity (TFP) growth. Two complementary methodologies were applied to test this hypothesis. First, the guiding principles of sustainable forest ecosystem management were synthesized to establish the conditions and the principles that logging firms must uphold to be stewards of ecological integrity. Second, TFP growth was measured and analyzed, using a nonparametric model. Sluggish but upward trends in TFP growth appeared to validate the hypothesis. Implications of the study for policy making and the benefits that society derives from TFP growth are highlighted.

Parametric Characterization of an Industrial Production Technology: The Canadian Sawmilling Industry’s Case

“…Six models are tested for capability of describing the Canadian sawmilling industry's production technology. Model I is the unrestricted long-run TL form cost function in Equation (2). The test models are: Model II for Hicks-neutrality of technological progress; Model III for presence of technological progress; Model IV for homotheticity; Model V for homogeneity; and Model VI for unitary elasticity.…”

“…Covering a 40-year period (1961-2000) 2 , the database includes multiple data sets, each comprising several va-riables. The output and input variables, including implicit derivations of some of the required variables and the main sources, are summarized here.…”

“…Hypothesis: Enhanced public and private investments in research and development (R&D) lead to human capital accumulation; hence, inventions/discoveries, which eventually lead to technological progress and thereby TFPG, which spurs economic growth [2]. Figure 1 illustrates the logic behind this hypothesis.…”

“…At the Canadian sawmilling industry level, plausibility of this hypothesis is expected to be realized through TFPG, conditioned upon: 1) technological progress, i.e., an upward shift of the production frontier, 2) optimized scale of operations, 3) technical efficiency, 4) sustainable forest ecosystem management, 5) environmentally (1) Enhanced investments in R&D (inventions/discoveries) ( (5) Technological progress (6) Total factor productivity growth (TFPG) (7) Economic growth (enhanced productive capacity of an economy) friendly production processes, 6) risk-taking entrepreneurship and managerial competency, and 7) coherent policies implemented through effective institutional configurations that guide allocation of scarce-productive inputs effectively and efficiently [2].…”