Articles by Päiviö Riihinen

This is a discussion paper on certain trends in forestry, and society as a whole which may constitute a major challenge for forest policy analysis in the future. Developed and developing countries are treated separately. In developed countries, one of the problems requiring policy analysis is the rising opportunity cost of forestry and the consequent weakening interest in commercial forestry among nonindustrial private forest owners. In developing countries, the most acute problem is the depletion of forests. While looking at the relative merits of the remedial means actually applied or suggested, major guidelines are needed for a proper balance between commercial timber production and forestry for rural development. Evaluation of past forestry projects is also desirable.

• Riihinen, E-mail: pr@mm.unknown

Certain trends in the sales behaviour of private non-industrial forest owners suggest that the forest industries have to rely on a raw material supply much less than the allowable cut. This paper deals with several factors responsible for the change in sales behaviour during the last 20–25 years. These changes are caused by social change, a multi-face process which is led by industrialization. It is manifested in the increasing division of labour, more pronounced strive for efficiency, change in social values for the benefit of the adoption of innovations and thus of further changes.

It has become more common than previously to borrow money instead of selling timber. An incentive for doing so is provided by the increased progression of income tax scales which makes it more profitable than earlier to substitute a loan for timber sales with a view to reduce the amount of taxes. In 1977, the real value of the farmers’ debts was 1.7 times as large as in 1970. Inflation provides a further incentive to borrow money rather than to sell timber, because it tends to reduce debts, whereas a growing stock keeps increasing without affecting the property taxation, maintaining its real unit value.

Certain forestry policy measures conductive to increasing the forest owner’s willingness to sell timber are suggested. Among the most promising seems to be an adjustment of the present area-based yield taxation so as to take into account the age class distribution of the growing stock.

The PDF includes a summary in Finnish.

• Riihinen, E-mail: pr@mm.unknown

The article deals with differences in economic growth in different countries and regions and with reasons for these differences. The central role in investments in economic growth and the mechanism of its differentiation are elucidated. The properties of forestry and the forest industries in equation or differentiating economic growth are considered. In the light of the theories of regional differentiation, the mere production of raw material in some region tends to increase differences in economic development if that raw material is processed in some other region – despite the fact that the level of income rises in both regions. It is therefore desirable that afforestation projects in the development countries are accompanied by the development of the forest industries.

The PDF includes a summary in Finnish.

• Riihinen, E-mail: pr@mm.unknown

In dealing with the effectiveness of forest taxation reform as a means of economic policy, the paper starts by recalling certain objectives of taxation, as well as the effect on aggregate demand of taxation in general. The effect of forest taxation depends on such factors as (1) whether the woodland owner has a regular income from a source other than forestry; (2) the system of taxation (whether taxation of actual stumpage revenue or of area-based yield); (3) the progression of taxation; and (4) the woodland owner’s income level.

The problem is illustrated by an example taken from Finland, where forestry revenue is taxed on the basis of area-based yield. A shift to taxation of actual stumpage revenue, as is proposed, is assumed. The effectiveness of this change is studied in terms of how far the assumed change is consistent with the objectives of the national economy. It is assumed that a shift to taxation of actual stumpage revenue would cause a decline in roundwood supply. A sensitivity analysis is then applied to detect the effect on tax revenue and national income of the tax reform. It is likely that a 10% decrease in fellings would bring about a reduction of tax revenue which would not be compensated for by the more perfect exposure of forestry income to taxation brought by the reform. The effect on investment, production, employment, differences in individual and regional income, and on the international balance of payments also disfavour the suggested change.

• Riihinen, E-mail: pr@mm.unknown

The development of a society often involves deep-going changes in its economic and social structure. According to the theory of cumulative growth, the economic changes attached to industrialization and modernisation of a society are characterized by the regional differentiation of economic activities. Expansive growth centres, areas with spreading effects, and back-wash areas will develop due to the dynamic forces of cumulative development.

The impact of industrialization and modernization on society as a whole usually manifests itself in an achievement of many of the welfare objectives considered desirable. There are, however, differences between the industries or other economic activities in respect to their effect on the economic or social life of a society or a region. The special feature of forestry and forest industry is that they are more concerned with rural districts than most other economic pursuits. The differentiation effect of forestry and forest industries is not as pronounced as that of certain other industries. Especially the back-wash effects remain rather weak.

In traditional, non-industrialized society the establishment of forestry activities may have an important role in the beginning of economic and social development which is rational from the point of view of the local communities as well as of the society as a whole. However, forestry may also have influences which one can see as socially undesirable. As far as traditional rural societies are concerned, one basic problem is that the establishment of forestry activities may advance the disintegration of ancient social institutions and structures. On the other hand, in a modern, industrialized society one primary function of forestry seems to be to maintain and strengthen the rural social structures and to equalize the regional differences caused by cumulative development. However, the role of forestry in rural development is likely to decrease when the industrialization and modernization progresses, for instance, because the increasing urban population will use forests for purposes other than forestry, such as recreation and nature conservation.

The PDF includes a summary in Finnish.

• Järveläinen, E-mail: vj@mm.unknown
• Riihinen, E-mail: pr@mm.unknown

A hypothetic problem is outlined as an example of the type of problem to which factor analysis should not be applied. Apart from this, attention is paid to industrialisation, a concept characterised by several variables, none of which can be held constant while analysing its influence on attitudes by multi-variable cross-tabulation techniques.

The PDF includes a summary in English.

• Riihinen, E-mail: pr@mm.unknown

The special act passed in 1961 provides for the tasks of the State Commission of Agriculture and Forestry. The Commission finances and supervises the activities of the research workers employed by the Commission. In addition, it gives special grants for specific purposes and endeavours to promote progress in research in accordance with the above-mentioned act.

Despite the formal requirement for progress, the real value of the grants given to forest research does not exhibit a rising trend. There seems to be a need for increasing funds both for research and publishing purposes.

The PDF includes a summary in English.

• Riihinen, E-mail: pr@mm.unknown

• Riihinen, E-mail: pr@mm.unknown

The forest management practices in Finland are closely related to the industrial history in the country. The selection cutting method used previously has now been gradually disappearing, and differences in the quality of forest management can still be observed between different owner groups. The national forest inventories indicate that farm woodlots show the poorest silvicultural state among the ownership categories. This study analyses social and economic causes responsible for variation in the silvicultural state of farm woodlots managed jointly with a cultivated land holding. The study is based on the data of third national forest inventory in Finland, and a factor analysis was calculated using the data.

Although the model developed explains more than a half of the total variance of the level of silviculture, only less than third of this is clearly explained by economic and social factors. The remaining two thirds are explained by the ’nature factor’, which includes both economic and site factors. This affects the effect of different kinds of forest policy measures. Of the variables in the model, the strongest influence in the level of silviculture have income, size of woodlot, size of land area under cultivation and distribution of forest types. The differences in the level of silviculture between different woodlots and different districts, may be explained by the theory of cumulative process. Regional differences in economic phenomena cannot be explained without taking into consideration the social value hierarchy in each region, which determines the range of variation of economic variables.

The PDF includes a summary in English.

• Riihinen, E-mail: pr@mm.unknown

The purpose of this study was to analyse economic models used in certain studies and to evaluate whether the economic theory envisaged by a model is consistent with its aims in forest policy. Second, the paper will point out assumed improvements for models that can be used as a basis for forest policy.

There are two types of economic models according to their purpose. One type, the marketing models, can be used for explaining or forecasting the consumer’s behaviour with no intension to affect the economies to be gained from the alternative patterns of behaviour explained. Others, the policy models, are meant to serve as guideposts which by means of normative forecasts point out the programme to be followed in order to attain certain aims. The majority of the policy models are static. The paper assesses the static models, and evaluates how well they fit their purpose. Special attention is given to dynamic economic models. A dynamic model can, at least in principle, be used to explain the course of events during the adjustment period required to achieve a production goal.

The PDF includes a summary in Finnish.

• Riihinen, E-mail: pr@mm.unknown

Short run market forecasting is desirable both for adjusting production and for regulating the national employment policy. In this study a forecast is made for one product. The purpose of the study is to develop a short run model describing newsprint sales in Finland that will combine mathematical simplicity, accuracy of description and universality.

Two methods of selecting variables seemed to be available. According to the first, newsprint consumption is divided into components, each of which is considered separately. The second method, which proved more fruitful, starts out directly from factors influencing the publishers’ decisions in purchasing newsprint, eliminating the least significant intuitively and simultaneously determining the lags.

The models developed in this study are capable of forecasting potential consumption. Even the best models in this study are multicollinear. The further into the future a forecast is extended, the greater is the possibility that relationships between the explanatory variables will change. It is intended that the newsprint seller will profit from the models achieved by using them to forecast sales in a future period, so that he can avoid both loss of interest due to acquiring a surplus of raw material or acute shortages of raw material.

The PDF includes a summary in Finnish.

• Riihinen, E-mail: pr@mm.unknown

Factors determining newsprint consumption in Finland in 1960–1986 were analysed. An econometric recursive multi-equation model describing the structure of the newspaper industry was formulated and estimated to obtain information on direct factors influencing newsprint demand. Short-term and long-term demand elasticities for newspapers and newspaper advertising were estimated.

The results indicate that the main factors affecting newsprint consumption are total circulation of newspapers, volume of newspaper advertising and the change in newsprint substance weight. Total newspaper circulation was found to depend on the rate of household formation and real household income changes. Demand for newspapers was shown to be price-inelastic. Structural analysis indicates that income elasticity of newspaper demand has increased slightly over time.

The volume of newspaper advertising was shown to affect newsprint consumption via the effects on pagination. Newspaper and television advertising were found to be independent of each other. The impact of the reduction in the basis weight was found to be substantial. The estimation of long-term elasticities of demand for newspapers and newspaper advertising using dynamic models revealed that demand rigidities exist.

The case study of Finland proposes three reasons why newsprint demand has not shown clear signs of reaching a saturation level. First, although population growth has stagnated in major consuming countries, the number of households has been increasing continuously. Second, income elasticity of newspaper demand does not show a declining trend. Third, the main driving force behind the buoyant demand is the resurgence of demand for newspaper as an advertising medium. In forecasting newsprint consumption, in addition to projections of economic growth, attention must be paid to the rate of household formation, the development of the advertising sector, the factors affecting competition between alternative media and the resulting media-mix in advertising, and changes in the substantial weight.

The PDF includes a summary in Finnish

• Katila, E-mail: mk@mm.unknown
• Riihinen, E-mail: pr@mm.unknown

The purpose of this study is (1) to develop, on the basis of sociological and economic theory, and of occasional observations, a frame of reference capable of providing a starting point for an empirical analysis of the behaviour of forest owners, and (2) to provide an insight into attitudes, and relate these with such general characteristics of forest owners as are theoretically defensible and supported by empirical findings.

The analysis of the results show that the more forest owners know about forestry the more generally are they willing to mark themselves trees for cutting, the more negative toward forest management associations, and the more inclined to believe that teaching forestry in elementary school is useful.

In general, it seems that the attitudes of forest owners toward forestry promotion in its »traditional» form become more negative as industrialization and urbanization raise the level of knowledge and technical know-how. However, this shift is not linear; there is first a weakening of negative attitudes (shift from mechanical to organic solidarity), while a further social change characterized by industrialization, urbanization, etc. seems to result in increasingly negative attitudes.

The PDF includes a summary in Finnish.

• Riihinen, E-mail: pr@mm.unknown