Horizontal mergers in the iron ore industry—An application of PCAIDS

The purpose of this paper is to estimate and analyse the price effects of the iron ore mergers between Rio Tinto and North Ltd in 2000, and CVRD and Caemi in 2001. The analyses are conducted using a merger simulation model that, based on the pre-merger situation, estimates the post-merger outcome. This paper applies the so-called proportionality-calibrated almost ideal demand system (PCAIDS) model, which assumes that the product is differentiated and that the strategic variable is price. The results from the merger simulations show that in the case of the merger between Rio Tinto and North Ltd, the merged firm has a combined market share of almost 20%. However, the estimated market weighted average price effect is only 2.6%. Regarding the merger between CVRD and Caemi, the merged firm's market share is about 29%, and the estimated market weighted average price effect is 4.6%. When removing Caemi's Canadian asset, which was the Commission decision in order to allow the merger, the market price effect decreases to 3.1%. Overall the results in this study support the Commission's decisions regarding both merger cases, and shows that merger simulations of price effects can be valuable tools in merger assessments.     

What do economic simulations tell us? Recent mergers in the iron ore industry

This paper investigates the European Commission's decision to allow a merger between two Brazilian iron ore mining companies, CVRD and Caemi, using data on the Direct Reduced Iron pellet market. By using a simulation model, we can directly simulate the total welfare effects from the merger and hence evaluate the merger from a new perspective. The results from our simulations suggest that the welfare effects are negative from the merger between CVRD and Caemi, which supports the conclusion drawn by the European Commission decision. By performing different simulations between hypothetical merger candidates, our results show that only mergers between small candidates have the potential to be welfare enhancing.     

Effectiveness of short-term knowledge communication on Baltic Sea marine genetic biodiversity to public managers

The aim of this study is to assess the impact of two forms of short-term knowledge communication—lectures and group deliberations—on public managers’ policy beliefs regarding genetic biodiversity in the Baltic Sea. Genetic biodiversity is a key component of biological variation, but despite scientific knowledge and far-reaching political goals, genetic biodiversity remains neglected in marine management. Previous research highlights lack of knowledge among managers as one explanation to the implementation deficit. This multidisciplinary study builds on the identified need for an improved knowledge transfer between science and ongoing management. A basic knowledge package on genetic biodiversity in the Baltic Sea was presented as either a lecture or a deliberative group discussion to two separate samples of public managers who are involved in Baltic Sea and other biodiversity management at the regional level in Sweden. The empirical findings show that the communicated information has an impact on the public managers’ beliefs on genetic biodiversity of the Baltic Sea. Lectures seem more efficient to transfer knowledge on this theme. Those who received information through a lecture strengthen their confidence in area protection as a management tool to conserve genetic diversity. They were also more convinced of the obligation of authorities at national and regional level to take on larger responsibility for genetic conservation than those managers who participated in a deliberative discussion.

     

Avoiding the pitfalls of adaptive management implementation in Swedish silviculture

There is a growing demand for alternatives to Sweden’s current dominant silvicultural system, driven by a desire to raise biomass production, meet environmental goals and mitigate climate change. However, moving towards diversified forest management that deviates from well established silvicultural practices carries many uncertainties and risks. Adaptive management is often suggested as an effective means of managing in the context of such complexities. Yet there has been scepticism over its appropriateness in cases characterised by large spatial extents, extended temporal scales and complex land ownership—characteristics typical of Swedish forestry. Drawing on published research, including a new paradigm for adaptive management, we indicate how common pitfalls can be avoided during implementation. We indicate the investment, infrastructure, and considerations necessary to benefit from adaptive management. In doing so, we show how this approach could offer a pragmatic operational model for managing the uncertainties, risks and obstacles associated with new silvicultural systems and the challenges facing Swedish forestry.     

European trade of forest products in the presence of EU policy

Increasing the share of renewable energy is of principal concern for the EU energy policy. A number of policies have been adopted, and, in part, been implemented by the EU member countries. An increasing share of renewable energy implies an increasing utilisation of biofuels in general and of forest-based biomass in particular. However, in the EU, the endowment and uses of forest-base biomass are diverse suggesting that an increasing trade would become necessary in order to cost effectively increase the utilisation of forest-based biomass. The purpose of this study is to, in the presence of EU energy policy, quantify and analyse possible trade levels for forest fuels in the EU. Particularly, the consequences on trade after implementing the White Paper and the RES-E Directive are analysed. Investigating the European trade in forest fuels is important for understanding how industry sectors in the EU will be affected by the policies. The results suggest that the implementation of the White Paper and the RES-E Directive will increase the trade in forest fuels, resulting in total trade increases of up to 67 percent. Furthermore, the national net trading levels are possible to derive. Depending on policy implementation the results differ – a country that was net importing given the White Paper implementation can instead be net exporting when applying the RES-E Directive. The fact that the policy implementations will increase the trade may mitigate potential industry problems to secure the needed inputs. On the other hand, the integration of countries increases the possibility for some industries to increase their production even more, possibly strengthening any input scarcity problems. It is therefore not possible to generally conclude if a more integrated European forest fuel market, and hence an increased European forest fuel trade, will mitigate industry problems to secure their needed inputs or not.     

Varying rotation lengths in northern production forests: Implications for habitats provided by retention and production trees

Because of the limited spatial extent and comprehensiveness of protected areas, an increasing emphasis is being placed on conserving habitats which promote biodiversity within production forest. For this reason, alternative silvicultural programs need to be evaluated with respect to their implications for forest biodiversity, especially if these programs are likely to be adopted. Here we simulated the effect of varied rotation length and associated thinning regimes on habitat availability in Scots pine and Norway spruce production forests, with high and low productivity. Shorter rotation lengths reduced the contribution made by production trees (trees grown for industrial use) to the availability of key habitat features, while concurrently increasing the contribution from retention trees. The contribution of production trees to habitat features was larger for high productivity sites, than for low productivity sites. We conclude that shortened rotation lengths result in losses of the availability of habitat features that are key for biodiversity conservation and that increased retention practices may only partially compensate for this. Ensuring that conservation efforts better reflect the inherent variation in stand rotation lengths would help improve the maintenance of key forest habitats in production forests.     

The role of biogeochemical hotspots,landscape heterogeneity,and hydrological connectivity for minimizing forestry effects on water quality

Protecting water quality in forested regions is increasingly important as pressures from land-use, long-range transport of air pollutants, and climate change intensify. Maintaining forest industry without jeopardizing sustainability of surface water quality therefore requires new tools and approaches. Here, we show how forest management can be optimized by incorporating landscape sensitivity and hydrological connectivity into a framework that promotes the protection of water quality. We discuss how this approach can be operationalized into a hydromapping tool to support forestry operations that minimize water quality impacts. We specifically focus on how hydromapping can be used to support three fundamental aspects of land management planning including how to (i) locate areas where different forestry practices can be conducted with minimal water quality impact; (ii) guide the off-road driving of forestry machines to minimize soil damage; and (iii) optimize the design of riparian buffer zones. While this work has a boreal perspective, these concepts and approaches have broad-scale applicability.     

Comparison of carbon balances between continuous-cover and clear-cut forestry in Sweden

Continuous-cover forestry (CCF) has been recognized for the production of multiple ecosystem services, and is seen as an alternative to clear-cut forestry (CF). Despite the increasing interest, it is still not well described how CCF would affect the carbon balance and the resulting climate benefit from the forest in relation to CF. This study compares carbon balances of CF and CCF, applied as two alternative land-use strategies for a heterogeneous Norway spruce (Picea abies) stand. We use a set of models to analyze the long-term effects of different forest management and wood use strategies in Sweden on carbon dioxide emissions and carbon stock changes. The results show that biomass growth and yield is more important than the choice of silvicultural system per se. When comparing CF and CCF assuming similar growth, extraction and product use, only minor differences in long-term climate benefit were found between the two principally different silvicultural systems.