Date of Award

Summer 8-17-2018

Level of Access

Open-Access Thesis

Degree Name

Master of Science in Economics (MSECO)

Department

Economics

Advisor

Adam J. Daigneault

Second Committee Member

Jonathan Rubin

Third Committee Member

Gary Hunt

Abstract

The pulp and paper industry has historically been of paramount importance for the state of Maine, both from cultural and economic perspectives. The industry has been a vital part of the forest products economy and a large contributor to employment and state gross domestic product (GDP). However, the number of pulp and paper mills in Maine has declined sharply in the last few decades, deeply harming employment levels, local economies and the forest products sector of the most heavily forested state in the nation. This phenomenon has sparked efforts to understand the factors behind the downfall of Maine's pulp and paper industry and investigate potential developments to reinvigorate the industry and its crucial significance to Maine. This work aims to contribute to these endeavors.

This thesis is divided in three chapters. First, Chapter 1 provides a historical background of the pulp and paper industry, discusses its current state and analyzes the validity of and trends in the factors which are commonly believed to have substantially affected this sector in Maine. Chapter 2 provides empirical evidence on the relationship between employment levels in the pulp and paper industry and the so-called "Cluster Rule," the first integrated, multi-media regulation released by the Environmental Protection Agency (EPA) in 1998. Lastly, Chapter 3 discusses the research conducted on the socio- and techno-economic feasibility of re-purposing idle pulp and paper facilities in the state of Maine into wood-based thermal deoxygenation (TDO) "drop-in" biofuel refineries.

As conclusions, change in paper and paperboard products demand, competition from foreign advanced and low-cost pulp and paper facilities, and price increments in key inputs for domestic pulp and paper mills are identified as some of the major factors explaining its recent downfall. Additionally, strong evidence is found that the Cluster Rule had net negative impacts on national employment levels from the pulp and paper industry ranging from 17% to 24% declines, and weaker evidence of a roughly 30% negative effect on Northeastern pulp and paper mills. Lastly, several studies concluded, from various perspectives and different scenarios, that TDO biofuel refineries developments in Maine are socioeconomically feasible.

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