Finnish Forest Research Institute  Metla
Press release 07.09.2006

Increased forest conservation has only mild impact on timber markets

According to a study conducted by the Finnish Forest Research Institute (Metla), the impact of increased forest conservation on the forest sector’s production, employment and timber markets are likely to be slighter than expected.

The growing timber resources in Finnish forests allow possibilities for increased conservation, but a substantial increase in conservation areas might have an effect on timber markets. When conservation is increased, timber resources are removed from commercial use, which reduces timber supply and increases stumpage prices. For the forest industry, increased stumpage prices means elevated costs, which may lead to reduced production, especially in the sawmill industry. In the paper industry production volumes are not affected, because the price of timber represents a relatively small proportion of the total costs.

The effects on timber markets depend on the magnitude of conservation and additionally, on how and where additional measures are directed and on possibilities to increase timber imports. The most significant economic impacts are created when sites selected for conservation are mature forests that have reached the age for regeneration. These sites are almost always densely growing. However, biohabitats with the greatest ecological value are not necessarily the ones dense with trees, and in practice, there can be good ecological justification for also protecting forests of lower economic value.

The effect of conservation on timber price is mitigated if timber is imported to compensate for the reduced volume of cuttings due to conservation. Increased roundwood imports slightly reduce forest owners’ stumpage price income. Without the substitutive imports increased conservation does not have much impact on the stumpage price income, even if cutting volumes are reduced. According to model calculations, the increase in stumpage prices offsets the decrease in domestic cuttings.

The traditional approach of increasing the area of strictly protected forest and targeting the measures to mature forests ready for regeneration causes the most substantial economic effects. The use of new conservation policy instruments based on voluntary participation, such as trading in nature values, creates lesser effects on production and employment, provided that the sites selected for conservation are mainly ones that forest owners have, for some reason, excluded from active commercial use.

The results were published in the METSO Forest Biodiversity Programme for Southern Finland research report.

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