Efficient management analysis of Forest Owners' Co-operative in Japan by DEA

Recently, more attentions and interests have drawn to the multi-functionality of forests, specifically the role of the sequestration of CO2 to mitigate the climate change. The demand of woods in the international market is also growing significantly, making the world wood price hiked up, which in turn allows Japanese forest industry to recover its competitive relatively. Indeed Japanese self-sufficiency ratio of woods, which had shown the downward trend, is now recovering. The current Japanese forests are facing the critical circumstances of whether or not they could become competitive and sustainable in the coming decades and thus have to consider seriously what kinds of measures and practices they should conduct for these goals. But there have not been enough studies which examine the possible factors for better management of forests statistically. We should light on this point. In this research, we focused on Forest Owners' Co-operatives in Japan, which are significantly important entities for the proper management of Japanese forests. We calculated the efficiencies of their managements by DEA (Data Envelopment Analysis) at prefectural level to identify what kinds of factors could contribute to the higher efficiency. We also tested the relationships of the efficiencies with scale merits of Forest Owners' Co-operatives, age structures of their employees and payment types respectively by regression analysis. As the results, we found a negative relationship between the efficiency and the payment type. We also found that the most effective Forest Owners' Co-operatives had large weights on producing and selling woods. There are two areas which should be investigated as the further study. Firstly, DEA with more disaggregated data (i.e., co-operative level) should be conducted. Secondly, we should consider the impact of the huge amount of subsidies for Forest Owners' Cooperatives. It is, however, very important to stress that details of these data are not publically available.