Decline in the Pulp and Paper Industry: Effects on Backward-Linked Forest Industries and Local Economies

Pulp, paper, and paperboard mills consume close to 52 percent of southern roundwood, providing a significant market to southern forest landowners. Declining numbers of pulpwood-using mills and downward trends in mill capacity, however, present a growing challenge to the southern forest sector. Shrinking mill capacity affects rural communities that depend on mill demand for labor and other production inputs. This study investigates the effect of pulp mill closures on the regional and local economy, focusing on the spillover effects to forestry and forest products industry. Multiregional input–output models were built for two mill closures using Impact Analysis for Planning (IMPLAN) showing linkages among different sectors, households, and governments in the regional economy. Results revealed the different effects across wood procuring zones with areas displaying significant loss in logging activity. Significance to other forestry-related industries depended on closed mills' inputs. We compared our results with information available in the literature regarding expected economic impact from a wood pellet mill, an alternative market for small-size wood. We expect research results will provide valuable information to policymakers and managers when addressing likely future changes in the paper manufacturing industry.