Forest biomass and Armington elasticities in Europe

The purpose of this paper is to provide estimated Armington elasticities for selected European countries and for three forest biomass commodities of main interest in many energy models: roundwood, chips & particles and wood residues. The Armington elasticity is based on the assumption that a specific forest biomass commodity is differentiated by its origin. The statistically significant estimated Armington elasticities range from 0.52 for roundwood in Hungary to approximately 4.53 for roundwood in Estonia. On average, the statistically significant Armington elasticity for chips & particles over all countries is 1.7 and for wood residues and roundwood 1.3 and 1.5, respectively. These elasticities can provide benchmark values for simulation models trying to assess trade patterns of forest biomass commodities and energy policy effects for European countries or for the EU as a whole.