Economic and environmental impacts of transport cost changes on timber and forest product markets in Norway

Forestry and forest industries are transport-intensive sectors. In Norway, the forest sector (forestry and forest industries) represents less than 1% of gross domestic product, but 14% of the total road transport work. Road transport represents 19% of the greenhouse gas (GHG) emissions in Norway. This article is an analysis of the economic and GHG emission impacts of the following three transport policy scenarios targeting the forest sector in Norway: (1) increased fuel prices, (2) increased allowable total weight for log trucks, and (3) accelerated infrastructure development. Three different models were combined in the analyses: a national full equilibrium model, a national transport logistics model and a regionalized partial equilibrium forest sector model. The results showed that increased maximum total weight had a greater economic impact on transport costs for roundwood than for forest industry products. Elimination of bottlenecks, such as bridges with limited allowable weight, is needed if the full potential of increased total weight is to be utilized. General infrastructure measures in the main road network had greater economic impacts on forest industries than on forestry. The short-run regional effects of changes in transport costs on production and trade-flows were, however limited, mostly in the range of 1-2%. Increased total weight brought increased emissions of GHGs, owing to transfer from rail to road, whereas accelerated infrastructure investment and increased fuel prices yielded reduced emissions, although the effects were relatively small, in the range of 0.5-1%.