Metla Project 3309

Forest policy for non-industrial private forestry in Finland

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Duration: 2001-2006   Keywords: effectiveness, field afforestation, forest management planning, forest policy, forestry behaviour, forestry extension, non-industrial private forest owners, objectives of forest ownership, rural development, stumpage prices, subsidies, timber supply
Research project group: Distinct projects - Social impact of forests


The study analyses the effects of various means of forest policy (normative, economic and informational guidance) on the silvicultural and timber harvesting behaviour of non-industrial private forest owners. In particular, the effectiveness of forestry extension and forest management planning are studied, as emphasised in Finland´s National Forest Programme 2010. The investigation also concerns the potentially negative effects of intensive field afforestation on the preconditions of local rural development. The long-term changes in the main target group of Finnish forest policy, non-industrial private forest owners, are examined through the changes in external factors (e.g., migration, aging, and means of livelihood). Finally, the long-term effects of stumpage prices on private timber supply are investigated, as regards to functionality of roundwood markets.

The project was supplemented by a new subproject in the beginning of 2003. The aims of the subproject are to estimate the sum of collected forest taxes and their distribution to tax collectors, and investigate impacts of the forest taxation transitional stage (1993-2005) and public financial assistance on the roundwood markets. In addition, surveys on the financial assistance in Nordic Countries and EU-funding for Finnish forestry are carried out.


The structural change in private forestry developed as expected during the 1990s (Metsäntutkimuslaitoksen tiedonantoja, MT 852). The proportion of farmers decreased and those of the wage-earners and retired persons increased. The mean age rose and at the moment forest owners are on average 57 years old. The great change in the ownership structure will be expected to take place when the post-war “great age cohorts” give up their forests around 2015-25. The proportion of owners with both economic and non-timber objectives clearly increased during the 1990s. The study report describes the structure of non-industrial private forest ownership in Finland. It also concerns landowner objectives and forest management behavior as well as timber sales on private woodlots.

Forest owners’ self-activity in forest work has been at a high level (MT 912). Forest owners had carried out almost 70 percent of the mostimportant silvicultural measures by using own or family labor force. Almost 60 percent of the forest owners had worked at least one day in their forests annually during the study period 1994-98. The use of own labor force in forestry comprised over 7.4 mill. working hours corresponding app. 4,650 working years annually. The value of this work load was over 90 mill. Euros per year. The study results indicate that self-activity in private forests is essential in order to achieve the goals for the various silvicultural measures in Finland's National Forest Programme 2010.

There is no single cause for delays in reforestation in private forests (MA 4/2005: 323–334). However, the forest holdings with delays were slightly smaller and their owners were older. Forestry was not given the top priority in the family economy on those holdings. In general, forest owners considered reforestation important and were, at least, not willing to admit that reforestation was delayed or improperly executed. The high costs of especially artificial reforestation were generally regarded problematic. According to forest owners, the delays on their own holdings were caused by natural conditions such as too poor or too fertile soil or moose damages. The owners also considered that incorrect reforestation method or improper tree species, or changes in the ownership of their holding, as well as simple failures to remember had had an impact on the delays in completing reforestation efforts.

Family forest owners’ choice of reforestation method, i.e. choice between natural reforestation and seeding/planting, could be explained according to the theory of planned behavior in a satisfactory magnitude (Forest Policy and Economics 7(3): 393-409). Concerning the direct effects, the attitude was the most powerful explanatory factor in the regression models, and the norm pressure and perceived behavioral control factors (e.g., soil conditions) had clearly smaller but mutually equal effects on the intention to use natural reforestation. Favorable past experience of natural reforestation had a clear positive effect on intention. Considering both direct and indirect effects via attitude, norm and perceived behavioral control, former experience was the most important explanatory factor. In Finland, only a minor part of the regeneration areas are reforested by natural regeneration, today. Clear cutting, supplemented by replanting or seeding, is the dominant method. According to these results, natural reforestation is associated with positive beliefs and favorable attitudes. In addition, forest owners seem to obey the advice of forestry professionals. Obviously, the avoidance of natural reforestation in practice could be explained, more than is shown in the study results, by controlling factors, such as soil conditions.

Objectives set in forest policy are often vague, which also makes evaluation of financial assistance difficult (Leppänen et al. 2005, EFFE Country report for Finland). Due to this, it is not sure whether the detected effects are desired or other effects. In international comparisons, financial assistance for forestry is strongly dependent also on the institutional structures. For instance, structure of taxes targeted to forests and forestry and organisational form of state forests matter. In Finland, we estimated that tax concessions for non-industrial private forestry are of greater magnitude than direct financial assistance. The reason for this (and also for tax harms) is site-productivity taxation, which is to end after transitional stage during 1993-2005. So, tax reform initiated in 1993 has been well founded. Administrational costs related to forest policy instruments and targetable to certain assistance programmes, are not easily available. This further complicates evaluation research.

The personnel of 13 regional Forestry Centres in Finland assessed that targeted financial assistance increases silviculture and joint projects between forest holdings (EFI Proceedings 54/2005). However, they saw that assistance also needs to be marketed to forest owners. Further, the easiest targets for financial assistance were provided for tending of young stands and for regeneration. The most difficult financing targets were forest nature management projects, biodiversity maintaining and precribed burning. The marketing reachability of forest owners is dependent on the place of residence with regard to forest holding, age of owner and type of ownership (single owner, joint ownership, heir).

In Finland, the social value related to timber production and CO2-sequestration was during EC 2080/92 programme period 1995-1999 equivalent to afforestation support and income-loss compensations within the programme, when 3% real interest rate was employed (EFI Proceedings 54/2005). However, the private value of field afforestation was considerably lower than that of oats and reed canary grass production. Cultivation of reed canary grass for energy production had greatest private surplus, oats somewhat lower and the field afforestation the lowest private surplus despite the afforestation support and income-loss compensations. The social surplus was clearly highest in field afforestation, and oats had lowest social surplus, when other externalities than CO2-sequestration are ignored. The social surplus of reed canary grass was assessed reasonable on arable peatlands, where field afforestation often fails. The results explain also the extent and failures related to EC 2080/92 field afforestation programme in Finland. The result of an economic study based on regional panel data from 1983-2000 is that financial assistance has promoted private silvicultural and forest improvement investments. Financial assistance has also increased roundwood supply (Kluwer, Forestry Sciences 74: 167-179). Time series study from years 1963-2000 resulted that supported holding-level investments and supported many-holding joint investements were complementary. However, some evidence of substitution between privately financed and publicly financed was found (Scandinavian Journal of Forest Research 18: 560-567). See, that soft loans in the studies have been included fully to public financing, which may affect these results, and should be further analysed. Another approach employing panel data from years 1983-2000 supports different, not substitution conclusion, but asymmetry between private and public financing (EFI Proceedings 54/2005). As a general conclusion from the previous three econometric studies is that financial assistance for forestry investments has an investment-increasing effect and during years 1963-2000 positive investment and roundwood supply effects have dominated.

Forest-related rural discourses were examined in combined questionnaire material for rural advisors and farmers in three contrasting districts: the Etelä-Pohjanmaa Development Centre that is characterised by strong arable farming with only c. 60% of the land under forest, Etelä-Savo DC that is characterised poor conditions for farming, extensive forests and a high proportion of farm closures and field afforestation, and Pohjois-Savo DC that is characterised by dairy farming and forestry. A production-oriented (utilitarian) discourse was strongly supported by rural advisors in each area, but it was weakly supported by farmers in Etelä- and Pohjois Savo DCs. It was generally unsupported by farmers in Etelä-Pohjanmaa DC. Environmental and non-wood benefits of forests (representing non-utilitarian discourses) received support from farmers in Etelä- and Pohjois-Savo DCs, but was not generally supported by rural advisors in all three districts or by farmers in Etelä-Pohjanmaa DC. The differences between the profession discourses of rural advisors and the lay disocurses of farmers need to be taken seriously when formulating regional forestry programmes.

Project leader: Hänninen, Harri
The Finnish Forest Research Institute, Vantaa Unit, PL 18, FI-01301 VANTAA, FINLAND
Phone: +358 29 532 2111

Other researchers: Harstela, Pertti, SU (2005), Hetemäki, Lauri, VA (2005), Ilvesniemi, Hannu, VA (2005), Jämsä, Jari, VA (2001-02), Karppinen, Heimo, VA (2001-05), Koskela, Terhi, VA (2002-03), Kuuluvainen, Jari (2001), Leppänen, Jussi, VA (2003-06), Ovaskainen, Ville, VA (2002-06), Petäjistö, Leena, VA (2003-05), Ripatti, Pekka (2001-02), Selby, Ashley, VA (2001-05), Toropainen, Mikko, JO (2003-06), Uusipuro, Jaana (2001-03)

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Updated 12.06.2012