Assessing The Suitability Of Partial Equilibrium Modelling In Analyzing The Forest Sector Of Developing Countries: Methodological Aspects With Reference To Tanzania

Abstract

This paper evaluates the strengths and weaknesses of applying partial equilibrium modeling for forest sector analysis in Tanzania. The aim of the evaluation is to determine the usefulness of this model framework in analyzing the impact of various policies on the development of the forest sector. The structure and specifications of the model, and the data input requirement and availability are examined. The results of a partial equilibrium model are examined against the findings from separate interviews conducted with the main stakeholders in the Tanzania forest sector. Based on the evaluation, the paper gives some recommendations regarding model improvements and areas of future research. The main assumptions of a perfect competitive market hypothesis underlying the Tanzania Trade Model (TTM) are violated especially on the supply of round wood, the existence of monopoly situation in wood-based panels and paper industry, and lack of a competitive transport market. However, there is competition in the domestic market between imports and local manufacturers, and for products such as sawn wood. Despite these violations, the quantitative analyses with the model together with the findings from stakeholders in the forest sector of Tanzania provide some useful lessons on the key deciding factors and the competitiveness of the forest industry products.

TJFNC Vol. 76 2007: pp. 11-27