Wood in the construction sector

Background and Objective

An increase in the use of wood is the major objective of the "Wood Charter", initiated by the German Government in 2004. Within ten years in Germany, the per capita consumption of wood and wood based products from sustainable production shall increase by 20 percent. According to current knowledge this goal seems almost to be fulfilled. However, the increase is mainly based on the growth of wood energy whereas the increase of the material use of wood is well below the 20 percent target. Since the construction industry is of significant importance for the material use of wood we conduct a comprehensive analysis on the demand for wood and wood products in this sector.

Approach

Based on empirical studies, we provide information on the consumption of wood products in the construction sector. In addition to this study, we also focus on how changes in prices of selected wood based products in the construction sector affect the demand for relevant substitute goods.

Data and Methods

The study is based on primary surveys (extensive field research) as well as secondary statistics and data from official statistics. For the analysis of the substitution relationships, cross-price elasticities of substitute goods in the construction industry will be calculated based on data from the Federal Statistical Office of Germany and other available statistics.

Results

For 2012, a volume of about 13.1 million m³(s) could be determined for the use of wood in the construction industry. About 64% of the amount can be attributed to the modernization of buildings and about 36% on new constructions. Hence, the construction sector is still of significant importance for the material use of wood.

Furthermore, the analysis shows that residential and non-residential buildings differ significantly in price reactions. The material selection in residential constructions depends on not quantifiable data. Price has no significant influence on demand, other non-quantifiable factors seem to be more important. However, the elasticities of demand for non-residential buildings are plausible in size and sign. For example, a change in price of wooden buildings by 1% causes a decrease of the associated consumption share by 0.92% (equivalent to about 0.07 percentage points in 2012) and an increase of the other consumption shares of about 0.07% (equivalent to about 0.07 percentage points in 2012).