Geographically-explicit, dynamic partial equilibrium model of regional primary value chains – Mathematical formulation and application to forestry in Northland region of New Zealand

This paper lays out the mathematical foundation of the Primary Value Chains (PVC) model, which is a geographically explicit, dynamic partial equilibrium model of regional value chains. Specifically, the model identifies: the equilibrium price-quantity bundles, optimal harvest schedules, market destinations, individual processing plant locations, and transportation routes. Results of a regional case study in the forestry sector in the Northland region of New Zealand are presented to showcase the model’s capabilities. The model’s structure is flexible enough to easily include other regions, cropping or farming systems, transportation alternatives, processing technologies and destination markets.