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A general continuous global approach to: - Optimal forest management with respect to the global warming problem and global economics - One section of the lectures by Peter Lohmander at UPV, Polytechnical University of Valencia, Spain, February 2010 Peter Lohmander Professor of forest management and economic optimization SLU, Faculty of Forest Sciences Dept. of forest economics 901 83 Umeå, Sweden http://www.Lohmander.com 1 2 3 min C Cu (u ) C f ( f ) Ca (a v) Cw ( w) u ,w s.t. u f K f K u wa K vu a K w 4 min C Cu (u ) C f ( K u ) Ca ( K u w) Cw ( w) u ,w 5 C Cu (u ) C f ( K u ) Ca ( K u w) 0 u C Ca ( K u w) Cw ( w) 0 w Cu C f Ca Ca Cw 6 C C ( u ) C ( K u ) C ( K u w ) u f a 2 u 2 C Ca ( K u w) uw 2 C Ca ( K u w) wu 2 C C ( K u w ) C a w ( w) 2 w 2 7 Second order minimum conditions: C 0 2 u 2 C 2 u 2 C wu 2 C uw 0 2 C 2 w 2 8 Cu C f Ca 0 Cu C f Ca Ca Ca Ca Cw 0 9 Cu C f Ca Cu C f Ca 0 C C C C C C C C C C C C C u f a a u a a f a a w a w 10 2 C C C C C C u f a a w a 2 C C C CuCa CuCw C f Ca C f Cw Ca 2 a w a CuCa CuCw C f Ca C f Cw CaCw 0 11 2 Observations of the first and second order conditions: f ( x, y ) fx 0 f 0 y df ( x, y ) f x dx f y dy 0 12 d f ( x, y) f xx (dx) f xy dxdy f yx dydx f yy (dy) 2 2 2 f xy f yx d 2 f ( x, y ) f xx (dx) 2 f xy dxdy f yx dydx f yy (dy ) 2 d f ( x, y ) 2 au 2 2huv bv 13 2 d f au 2huv bv 2 2 2 h 2 2 d f a u 2 uv bv a 2 2 h h 2 h 2 2 d f a u 2 uv 2 v bv v a a a 2 2 2 14 2 h d f au v a 2 ab h 2 v a 2 f xx a a f xx f xy f yx f yy a h h b ab h 2 15 a 0 ab h 2 0 d f 0 2 h 2 a 0 ab h 0 u v 0 d f 0 a 2 a 0 ab h a 0 ab h 2 2 0 v 0 d f 0 2 0 u 0 v 0 d f 0 2 16 So, if and then f xx 0 and f xx f yx f xy 0 f yy dx 0 dy 0 or dx 0 dy 0 or dx 0 dy 0 d f 0 2 17 Then, the solution to fx 0 f 0 y represents a (locally) unique minimum. 18 A numerically specified example: 1 Cu (u ) 5 u 20 1 C f ( f ) 10 f 300 1 Ca ( K u w) 0 K u w 20 1 Cw ( w) 14 w 100 19 20 Comparative statics analysis: C Cu (u ) C f ( K u ) Ca ( K u w) 0 u C Cw ( w) Ca ( K u w) 0 w 21 C C C du C dw C C dK f a a f a u Ca du Cw Ca dw Ca dK 22 1 1 1 1 1 1 20 300 20 du 20 dw 300 20 dK 1 1 1 1 du dw dK 20 100 20 20 23 31 1 16 du dw dK 300 20 300 1 6 1 du dw dK 20 100 20 24 16 300 1 du 20 dK 31 300 1 20 1 20 6 100 0.0007 0.189189189 0.0037 1 20 6 100 25 31 300 1 dw 20 dK 31 300 1 20 16 300 1 0.0025 20 0.675675675 0.0037 1 20 6 100 26 Explicit solution of the example for alternative values of K C Cu (u ) C f ( K u ) Ca ( K u w) 0 u C Cw ( w) Ca ( K u w) 0 w 27 C 1 1 1 5 u 10 ( K u ) 0 ( K u w) 0 u 20 300 20 C 1 1 14 w 0 ( K u w) 0 w 100 20 28 C 31 15 16 1500 u w K 0 u 300 300 300 300 C 5 6 5 1400 u w K 0 w 100 100 100 100 29 C 0 31u 15w 16 K 1500 0 u C 0 5u 6w 5K 1400 0 w 30 C 0 31u 15w 1500 16 K u C 0 5u 6w 1400 5K w 31 32 1500 16 K 15 6 1500 16 K 15 1400 5 K 1400 5K 6 u 31 15 31 6 515 5 6 30000 21K u 111 33 31 1500 16 K 5 1400 5K 31(1400 5K ) 5(1500 16 K ) w 31 15 31 6 515 5 6 50900 75K w 111 34 Dynamic approach analysis C du u u dt C dw w w dt 1 35 x u ueq y w w eq 36 x C C C x C y u f a a y Ca x Cw Ca y 37 x m x m y xx xy y myx x myy y 38 x(t ) Ae ; y(t ) Be kt kt kAe mxx Ae mxy Be kt kt kt kBe m Ae m Be yx yy kt kt kt 39 kA mxx A mxy B kB m A m B yx yy 40 k mxx m yx mxy A 0 k myy B 0 41 • k is selected in way such that the two equations become identical. This way, the equations only determine the ratio B/A, not the values of A and B. This is necessary since we must have some freedom to determine A and B such that they fit the initial conditions. • With two roots (that usually are different), we (usually) get two different ratios B/A. This makes it possible to fit the parameters to the (two dimensional) initial conditions (x(0),y(0)). 42 One way to determine the value(s) of k is to use this equation: k mxx mxy myx k myy k mxx k myy mxy myx 0 43 mxy myx k mxx k myy mxy 2 0 k mxx myy k mxx myy mxy 0 2 2 44 Another way to get to the same equation, is to make sure that the two equations give the same value to the ratio B/A. B k mxx k mxx A mxy B 0 A m xy mxy myx B mxy mxy A k myy B 0 A k myy 45 B A mxy k mxx mxy k myy k mxx k m yy mxy 2 0 k mxx m yy k mxx m yy mxy 0 2 2 46 Lets us solve the equation! m k xx myy mxx myy 2 mxx myy mxy 2 2 2 m k m m m 2 xx yy xx yy mxy 2 2 2 47 No cyclical solutions! • Observe that the expression within the square root sign is positive. • As a consequence, only real roots, k, exist. • For this reason, cyclical solutions to the differential equation system can be ruled out. 48 mxx Cu C f Ca mxy myx Ca myy Cw Ca 49 Cu C f Ca Cw Ca Cu C f Ca Cw Ca k 2 2 Cu C f Cw 2Ca Cu C f Cw k 2 2 2 Ca 2 C a 50 2 2 C C C 2C C C C C k 2 2 2 u f w a u f w a • We may observe that ABS Cu C f Cw ABS Cu C f Cw • As a consequence, both roots to to the equation are strictly negative. • Therefore, divegence from the equilibrium solution is ruled out. 51 2 • With only strictly negative roots, we have a guaranteed convergence to the equilibrium. • However, this does not have to be monotone. • With two different roots (k1 and k2) and with parameters A1 and A2 with different signs (and/or parameters B1 and B2 with different signs), the sign(s) of the deviation(s) from the equilibrium value(s) may change over time. 52 Derivation of the roots in the example: 1 1 1 1 20 300 100 10 k 2 2 1 1 1 20 300 100 1 2 2 20 53 49 13 1 k 600 600 400 2 k1 0.081667 0.054493 k1 0.13616 k2 0.081667 0.054493 k2 0.027174 54 x (t ) A1e A2 e k1t k2t y ( t ) B e B e 1 2 k1t k2t 55 We may determine the path completely using the initial conditions x(0), y(0) x0 , y0 56 We also use the earlier derived results: B A mxy k mxx mxy k myy 57 Using the derived roots, we get: k1 mxx B1 A1 mxy A2 mxy k2 mxx B2 58 m xy k1t k 2t x ( t ) A e B e 1 2 k m 2 xx k m 1 xx k1t k2t y (t ) A1e B2e m xy 59 Let us use the initial conditions and determine the parameters! mxy x A B 1 2 0 k m 2 xx k m 1 xx y A1 B2 0 m xy 60 1 k m 1 xx mxy k2 mxx A1 x0 B2 y0 1 mxy 61 x0 A1 mxy k2 mxx y0 1 k1 mxx mxy 1 mxy k2 mxx mxy x0 y0 k2 mxx k1 mxx 1 k2 mxx 1 62 1 B2 k1 mxx mxy 1 k1 mxx mxy x0 y0 mxy k2 mxx k1 mxx y0 x0 m xy k1 mxx 1 k2 mxx 1 63 Using the figures from the example, we get: x0 0.6565 y0 A1 1.431 y0 0.6565 x0 B2 1.431 64 The solutions to the numerically specified example X(t) = -106.63·EXP(- 0.13612·t) + 6.61·EXP(- 0.02718·t) 65 Y(t) = - 69.95·EXP(- 0.13612·t) - 10.07·EXP(- 0.02718·t) 66 67 The cost function from different perspectives: (based on the numerically specified example) 68 69 70 Numerical solution of the example problem using direct minimization: Costmin Valencia Lohmander 2010-02-22 71 K = 600 • • • • • • • • • • • • • • • • model: min = C; k = 600; C = cu + cf + ca + cw; cu = 5*u+1/40*u^2; cf = 10*f + 1/600*f^2; ca = 1/40*(k-u-w)^2; cw = 14*w+1/200*w^2; f = k-u; a = k-w; @free(anet); anet = a - u; @free(eqw); 31*equ+15*eqw=1500 + 16*k; 5*equ+6*eqw = -1400+5*k; end 72 • • • • • • • • • • • • • • Variable Value C 8975.806 K 600.0000 CU 4995.578 CF 2516.909 CA 1463.319 CW 0.000000 U 358.0645 F 241.9355 W 0.000000 A 600.0000 ANET 241.9355 EQW -53.15315 EQU 383.7838 Reduced Cost 0.000000 0.000000 0.000000 0.000000 0.000000 0.000000 0.000000 0.000000 1.903226 0.000000 0.000000 0.000000 0.000000 73 K = 800 • • • • • • • • • • • • • • • • model: min = C; k = 800; C = cu + cf + ca + cw; cu = 5*u+1/40*u^2; cf = 10*f + 1/600*f^2; ca = 1/40*(k-u-w)^2; cw = 14*w+1/200*w^2; f = k-u; a = k-w; @free(anet); anet = a - u; @free(eqw); 31*equ+15*eqw=1500 + 16*k; 5*equ+6*eqw = -1400+5*k; end 74 • • • • • • • • • • • • • • Variable C K CU CF CA CW U F W A ANET EQW EQU Value 13952.25 800.0000 6552.228 4022.401 2196.271 1181.353 421.6216 378.3784 81.98198 718.0180 296.3964 81.98198 421.6216 Reduced Cost 0.000000 0.000000 0.000000 0.000000 0.000000 0.000000 0.000000 0.000000 0.000000 0.000000 0.000000 0.000000 0.000000 75 K = 1000 • • • • • • • • • • • • • • • • model: min = C; k = 1000; C = cu + cf + ca + cw; cu = 5*u+1/40*u^2; cf = 10*f + 1/600*f^2; ca = 1/40*(k-u-w)^2; cw = 14*w+1/200*w^2; f = k-u; a = k-w; @free(anet); anet = a - u; @free(eqw); 31*equ+15*eqw=1500 + 16*k; 5*equ+6*eqw = -1400+5*k; end 76 • • • • • • • • • • • • • • Variable C K CU CF CA CW U F W A ANET EQW EQU Value 19357.66 1000.000 7574.872 5892.379 2615.068 3275.339 459.4595 540.5405 217.1171 782.8829 323.4234 217.1171 459.4595 Reduced Cost 0.000000 0.000000 0.000000 0.000000 0.000000 0.000000 0.000000 0.000000 0.000000 0.000000 0.000000 0.000000 0.000000 77 Numerical approximation of the dynamics: • • • • • • • • • • • • ! dynsim; ! Peter Lohmander Valencia 20100222; model: sets: time/1..100/:x,y,dx,dy; endsets cxx = 31/300; cxy = 15/300; cyx = 15/300; cyy = 18/300; x(1) = -100; y(1) = -80; 78 • @FOR( time(t): dx(t)= -( cxx*x(t) + cxy*(y(t)) )); • @FOR( time(t): dy(t)= -( cyx*x(t) + cyy*(y(t)) )); • @FOR( time(t)| t#GT#1: x(t)= x(t-1) + dx(t-1) ); • @FOR( time(t)| t#GT#1: y(t)= y(t-1) + dy(t-1) ); • • • • @for(time(t): @free(x(t))); @for(time(t): @free(y(t))); @for(time(t): @free(dx(t))); @for(time(t): @free(dy(t))); • end 79 • • • • • Variable CXX CXY CYX CYY • • • • • • X( 1) X( 2) X( 3) X( 4) X( 5) X( 6) Value 0.1033333 0.5000000E-01 0.5000000E-01 0.6000000E-01 -100.0000 -85.66667 -73.30444 -62.64442 -53.45430 -45.53346 80 • • • • • • • • • • X( 19) X( 20) X( 21) X( 22) X( 23) X( 24) X( 25) X( 26) X( 27) X( 28) -3.638081 -2.705807 -1.912344 -1.238468 -0.6675825 -0.1853596 0.2205703 0.5608842 0.8447973 1.080263 81 • • • • • • X( 40) X( 41) X( 42) X( 43) X( 44) X( 45) 1.894182 1.881254 1.863429 1.841555 1.816360 1.788465 82 • • • • • • • • Y( 1) Y( 2) Y( 3) Y( 4) Y( 5) Y( 6) Y( 7) Y( 8) -80.00000 -70.20000 -61.70467 -54.33716 -47.94471 -42.39532 -37.57492 -33.38500 83 • • • • • • • Y( 94) Y( 95) Y( 96) Y( 97) Y( 98) Y( 99) Y( 100) -0.7735111 -0.7524823 -0.7320263 -0.7121272 -0.6927697 -0.6739392 -0.6556210 84 References • • • • • Lohmander, P., Adaptive Optimization of Forest Management in a Stochastic World, in Weintraub A. et al (Editors), Handbook of Operations Research in Natural Resources, Springer, Springer Science, International Series in Operations Research and Management Science, New York, USA, pp 525-544, 2007 http://www.amazon.ca/gp/reader/0387718141/ref=sib_dp_pt/701-0734992-1741115#reader-link Lohmander, P,. Energy Forum, Stockholm, 6-7 February 2008, Conference program with links to report and software by Peter Lohmander: http://www.energyforum.com/events/conferences/2008/c802/program.php http://www.lohmander.com/EF2008/EF2008Lohmander.htm Lohmander, P., Ekonomiskt rationell utveckling för skogs- och energisektorn i Sverige, Nordisk Papper och Massa, Nr 3, 2008 Lohmander, P., Mohammadi, S., Optimal Continuous Cover Forest Management in an Uneven-Aged Forest in the North of Iran, Journal of Applied Sciences 8(11), 2008 http://ansijournals.com/jas/2008/1995-2007.pdf http://www.Lohmander.com/LoMoOCC.pdf Lohmander, P., Guidelines for Economically Rational and Coordinated Dynamic Development of the Forest and Bio Energy Sectors with CO2 constraints, Proceedings from the 16th European Biomass Conference and Exhibition, Valencia, Spain, 02-06 June, 2008 (In the version in the link, below, an earlier misprint has been corrected. ) http://www.Lohmander.com/Valencia2008.pdf 85 • Lohmander, P., Economically Optimal Joint Strategy for Sustainable Bioenergy and Forest Sectors with CO2 Constraints, European Biomass Forum, Exploring Future Markets, Financing and Technology for Power Generation, CD, Marcus Evans Ltd, Amsterdam, 16th-17th June, 2008 http://www.Lohmander.com/Amsterdam2008.ppt • Lohmander, P., Ekonomiskt rationell utveckling för skogs- och energisektorn, Nordisk Energi, Nr. 4, 2008 • Lohmander, P., Optimal resource control model & General continuous time optimal control model of a forest resource, comparative dynamics and CO2 consideration effects, SLU Seminar in Forest Economics, Umea, Sweden, 2008-09-18 http://www.lohmander.com/CM/CMLohmander.ppt • Lohmander, P., Tools for optimal coordination of CCS, power industry capacity expansion and bio energy raw material production and harvesting, 2nd Annual EMISSIONS REDUCTION FORUM: Establishing Effective CO2, NOx, SOx Mitigation Strategies for the Power Industry, CD, Marcus Evans Ltd, Madrid, Spain, 29th & 30th September 2008 http://www.lohmander.com/Madrid08/Madrid_2008_Lohmander.ppt • Lohmander, P., Optimal CCS, Carbon Capture and Storage, Under Risk, International Seminars in Life Sciences, Universidad Politécnica de Valencia, Thursday 2008-10-16 http://www.lohmander.com/OptCCS/OptCCS.ppt 86 • Lohmander, P., Economic forest production with consideration of the forest and energy industries, E.ON International Bioenergy Conference, Malmo, Sweden, 2008-10-30 http://www.lohmander.com/eon081030/eon081030.ppt • Lohmander, P., Optimal dynamic control of the forest resource with changing energy demand functions and valuation of CO2 storage, UE2008.fr, The European Forest-based Sector: Bio-Responses to Address New Climate and Energy Challenges? Nancy, France, November 6-8, 2008 http://www.lohmander.com/Nancy08/Nancy08.ppt (See also later versions 2009) • Lohmander, P., Optimal dynamic control of the forest resource with changing energy demand functions and valuation of CO2 storage, The European Forest-based Sector: Bio-Responses to Address New Climate and Energy Challenges, Nancy, France, November 6-8, 2008, Proceedings: (forthcoming) in French Forest Review (2009) Abstract: Page 65 of: http://www.gip-ecofor.org/docs/34/rsums_confnancy2008__20081105.pdf Presentation as pdf: http://www.gipecofor.org/docs/nancy2008/ppt_des_presentations_orales/lohmander_session_3.1.pdf Conference: http://www.gip-ecofor.org/docs/34/nancy2008englishprogramme20081106.pdf • ECOFOR, (in French) Summary of results by Peter Lohmander (on page 8) in “Evaluation du developpement de la bioenergie”, in Bulletin d’information sur les forets europeennes, l’energie et climat, Volume 157, Numero 1, Lundi 10 novembre 2008 http://www.gip-ecofor.org/docs/34/nancy2008synthseiisd.pdf • IISD, Summary of results by Peter Lohmander (on page 6) in “Evaluation of Bioenergy Development”, in European Forests, Energy and Climate Bulletin, Published by the International Institute for Sustainable Development (IISD) http://www.iisd.org/ , Vol. 157, No. 1, Monday, 10 November, 2008 http://www.iisd.ca/download/pdf/sd/ymbvol157num1e.pdf 87 • Lohmander, P., Integrated Regional Study Stage 1., Presentation at the E.ON - Holmen Sveaskog - SLU Research Meeting, Norrköping, Sweden, 2008-12-10 – 2008-12-11, http://www.lohmander.com/NorrDec08/NorrDec08.ppt , http://www.lohmander.com/NorrDec08/NorrDec08.pdf , http://www.lohmander.com/NorrDec08/NorrDec08RawData.xls • Lohmander, P., Öka avverkningen och hjälp Sverige ur krisen, VI SKOGSÄGARE, Debatt, Nr. 1, 2009 http://www.lohmander.com/PLdebattVIS2009nr1.pdf • Lohmander, P., Economic Forest Production with Consideration of the Forest and Energy Industries (SLU 2009-01-29), http://www.lohmander.com/SLU09/SLU09.pdf http://www.lohmander.com/SLU09/SLU09.ppt • Lohmander, P., Rational and sustainable international policy for the forest sector with consideration of energy, global warming, risk, and regional development, SLU, Umea, 2009-02-18, http://www.lohmander.com/IntPres090218.ppt • Lohmander, P., Strategic options for the forest sector in Russia with focus on economic optimization, energy and sustainability (Full paper in English with short translation to Russian), ICFFI News, Vol. 1, Number 10, March 2009 http://www.Lohmander.com/RuMa09/RuMa09.htm 88 • International seminar, ECONOMICS OF FORESTRY AND FOREST SECTOR: ACTUAL PROBLEMS AND TRENDS, St Petersburg, Russia, March 2009, http://www.lohmander.com/RuMa09/ProgramRuMa09.pdf • Lohmander, P., Satsa på biobränsle, Skogsvärden, Nr 1, 2009 http://www.Lohmander.com/PL_SV_1_09.jpg • Lohmander, P., Stor potential för svensk skogsenergi, Nordisk Energi, Nr. 2, 2009 http://www.Lohmander.com/Information/ne1.jpg http://www.Lohmander.com/Information/ne2.jpg http://www.Lohmander.com/Information/ne3.jpg http://www.Lohmander.com/PL_SvSE_090205.pdf http://www.Lohmander.com/PL_SvSE_090205.doc • Lohmander, P., Strategiska möjligheter för skogssektorn i Ryssland Nordisk Papper och Massa, Nr 2, 2009 http://www.Lohmander.com/PL_NPM_2_2009.pdf http://www.Lohmander.com/PL_RuSwe_09.pdf http://www.Lohmander.com/PL_RuSwe_09.doc 89 • Lohmander, P., Economic forest production with consideration of the forest- and energy industries, Project meeting presentation, Stockholm, Sweden, 2009-05-11, http://www.lohmander.com/EON_090511.ppt • Lohmander, P., Derivation of the Economically Optimal Joint Strategy for Development of the Bioenergy and Forest Products Industries, European Biomass and Bioenergy Forum, MarcusEvans, London, UK, 8-9 June, 2009, http://www.lohmander.com/London09/London_Lohmander_09.ppt & ttp://www.lohmander.com/London09.pdf • Lohmander, P., Rational and sustainable international policy for the forest sector - with consideration of energy, global warming, risk, and regional development, Preliminary plan, 2009-08-05, http://www.lohmander.com/ip090805.pdf 90 91 92 A general continuous global approach to: - Optimal forest management with respect to the global warming problem and global economics - One section of the lectures by Peter Lohmander at UPV, Polytechnical University of Valencia, Spain, February 2010 Peter Lohmander Professor of forest management and economic optimization SLU, Faculty of Forest Sciences Dept. of forest economics 901 83 Umeå 93