Directorate D, Bioeconomy Unit (D1)

This brief highlights some of the key issues in securing the continued function of the boreal forests to work for people and nature. Future uncertainties certainly increase the demands for their innovative use and sustainable management. It was prepared as a joint effort of IUFRO-WFSE, the European Forest Institute (EFI), the Finnish Forest Research Institute (Metla), the Future Forests Research Program (FF), the Swedish Agricultural University (SLU), University of Eastern Finland (UEF) and Canadian and American collaborators.

Forests will play a crucial role in the transformation from an economy based on fossil fuels to one relying on renewable resources. Hence, besides being a source of raw material for the forest industry, in the future, forests are expected to increasingly contribute to the production of energy as well as providing a wide range of environmental and social services. Thus, the objective of the present study is to assess the short-term and long-term potential for increasing sustainable wood supply in the EFINORD countries. Present practices and prospects for intensive forest management have been assessed using information from a questionnaire complemented by compilation and evaluating of national forest inventory (NFI) data and other forest sector relevant information. The study indicates a striking variation in the intensity of utilisation of the wood resources within the EFINORD region. For the region as a whole, there seems to be a substantial unused (biophysical) potential. However, ...

Raised public concern in the European Union (EU) about the legality of its timber imports has pushed the European Commission to raise its standards and legality demands for wood imports. Combining literature reviews, structured interviews and trade data analyses, this study assesses the potential influence from Forest Law Enforcement Governance and Trade (FLEGT) (with its Voluntary Partnership Agreements (VPA) system and new legislation EU Timber Regulation (EUTR)), and third party verification schemes on the timber trade between tropical countries and Europe. These instruments have the potential to reduce the amount of illegally sourced timber being placed on the market, and they seem to have resulted in both increasing support of legality verification and certification uptake. However, there are signs of increased ambiguity in trade that could originate as a side effect of the transition towards a stricter regulation for tropical timber. Such ambiguity is explicitly taken into account here. Possible consequences from increased ambiguity are substitution of oak lumber for tropical hardwood lumber, and a diversion of exports of tropical timber to destinations with a less stringent regulatory framework than the EU. Evidence of these trade patterns in the literature reviews,

Forest management strategies and policies such as REDD (reduced emissions from deforestation and forest degradation) may have unintentional implications for forest sectors in countries not targeted by such policies. The success of a policy effort like REDD would result in a significant reduction in deforestation and forest degradation and an ensuing reduction in the supply of natural forest timber production within participating countries. This could in turn result in price increases, inducing a supply response outside project boundaries with possible implications for forest management as well as global carbon emissions. This paper reviews the literature to discern potential timber market implications for countries sourcing wood products from developing countries affected by REDD related conservation efforts. The literature reviewed shows varying degrees of market effects leakage-policy actions in one place creating incentives for third parties to increase timber harvesting elsewhere through the price mechanism-ranging from negligible to substantial. However, wood products in the studies reviewed are dealt with on quite an aggregated scale and are assumed to be more or less perfect substitutes for wood products outside conservation effort boundaries. The review suggests that a thorough mapping of the end-uses of tropical timber is needed to comprehensively analyze impacts on wood-product markets in regions such as Europe from conservation efforts in tropical developing countries. The types of tropical timber expected to be affected, in which applications they are used, which are the most likely substitutes and where they would be sourced, are issues that, along with empirical analysis of supply and demand price

Considering the variety of attitudes, objectives and behaviors characterizing forest owners is crucial for accurately assessing the impact of policy and market drivers on forest resources. A serious shortcoming of existing pan-European Decision Support Systems (DSS) is that they do not account for such heterogeneity, consequently disregarding the effects that this might have on timber supply and forest development. Linking a behavioral harvesting decision model-Expected Value Asymmetries (EVA)-to a forest resource dynamics model-European Forestry Dynamics Model (EFDM)-we provide an example of how forest owner specific characterization can be integrated in a DSS. The simulation results indicate that the approach holds promise as regards accounting for forest owner behavior in simulations of forest resources development. Hence, forest owner heterogeneity makes the distribution of forestland on owner types non-trivial, as it affects harvesting intensity and, subsequently, inter-temporal forest development.

Existing decision support systems (DSS) do not account for forest owner heterogeneity, nor do they explicitly model the reaction of forest owners to policy. Hence, current DSS are suitable for response analysis, but much less useful for policy impact assessment or forecasting. The current study presents a theoretical model of harvesting behavior which provides the basis for a simulation model, Expected Value Asymmetries (EVA), useful for analyzing how timber supply and forest characteristics are affected when forest owners differ as to responsiveness to information, risk aversion, and patience as regards postponement of harvesting revenues. The simulation results clearly indicate that the model is well adapted for considering forest owner heterogeneity when assessing the impact of policy on the inter-temporal development of forest resources and timber market conditions. Finally, it is outlined how EVA could integrate forest owner specific harvesting behavior in an augmented Decision Support System (DSS), thus addressing the inability of DSS operational at pan-European level to model the interaction between policy and forest management decisions.

Implemented in March 2013, the EU Timber Regulation is affecting hardwood exporters and importers. The EUTR requires proof of timber’s origin and legality to ensure that no illegal timber is imported into the EU. The EUTR is part of the EU’s Forest Law Enforcement, Governance and Trade (FLEGT) Action Plan, with its specific goal to end illegal logging, thereby improving sustainability of forest resources. To this end the EU intends to block imports of any wood or wood product which comes from unknown sources. Certification of SFM will help EU importers minimize risk, which is an essential part of their required due diligence system. Monitoring organizations are established to assist trade associations and businesses to construct comprehensive due diligence systems. National competent authorities are designated to follow the trade of the new FLEGT-licensed timber and timber products. In 2013, the first year of the EUTR, there are positive impacts, of which the most important is aware...

Efforts to increase wood mobilization have highlighted the need to appraise drivers of short-run timber supply. The current study aims to shed further light on harvesting decisions of private forest owners, by investigating optimal harvesting under uncertainty, when timber revenues are invested on financial markets and uncertainty is mitigated by news releases. By distinguishing between aggregate economic risk and sector specific risks, the model studies in great detail optimal harvesting-investment decisions, with particular emphasis on the non-trivial transmission of risk on optimal harvesting, and on the way private forest owners react to news and information. The analysis of the role played by information in harvesting decisions is a novelty in forest economic theory. The presented model is highly relevant from a policy-information is a commonly used forest policy instrument-as well as a practical perspective, since the mechanism of risk transmission is at the basis of timber pricing.

This paper describes the conceptual design of a regional modelling framework to assess scenarios for the forest-based bioeconomy. The framework consists of a core set of tools: a partial equilibrium model for the forest sector, a forestry dynamics model for forest growth and harvest and a wood resources balance sheet. The framework can be expanded to include an energy model, a land use model and a forest owner decision model. This partially integrated, multi-disciplinary modelling framework is described, with particular emphasis on the structure of the variables to be exchanged between the framework tools. The data exchange is subject to a series of integrity checks to ensure that the model is computing the correct information in the correct format and order of elements.

Keywords: Diffusion Engineered wood products Multi-story wood-frame construction Operational environment Scenario analysis Compared to many manufacturing industries, there have been few major improvements over the past few decades in the productivity, profitability, or the environmental impact of construction. However, driven by institutional changes, promotion campaigns, and technological development in the 1990s, novel industrial woodframe multi-story construction (WMC) practices have been emerging in some European countries. The aim of the study is to explore the WMC market potential in Europe by combining two complementary approaches: Top-down scenario analysis and bottom-up innovation diffusion analysis. The results show that the WMC diffusion is heavily dependent on the regulatory framework and the structure of the construction industry. The risk-averse nature of the construction value chain resisting the uptake of new practices appears to be a more significant hindrance for the future market potential of WMC, compared to the possible competition from alternative construction practices. It would require both increasing competition within the WMC sector and increasing co-operation between wood product suppliers and the construction sector to attract investments, to reduce costs, and to make the WMC practices more credible throughout the construction value chain.

Forest-product markets can be affected by policies aimed at mitigating climate change in several ways; directly through substitution of wood products for other materials that yield more greenhouse gas (GHG) and the development and use of bioenergy and biofuel or indirectly through policies involving forest-based carbon sequestration. The most internationally relevant climate mitigation policy with a specific focus on forests, is the United Nations collaborative initiative on Reducing Emissions from Deforestation and forest Degradation (REDD) in developing countries. REDD is an effort to create a financial value for the carbon stored in forests, and thereby provide an incentive for developing countries to reduce emissions from forest loss. In addition to its intended outcomes, forest management strategies and policies such as REDD may have unintentional implications for forest sectors in countries that are not REDD targets, most notably through market linkages. By its very definition...

Forests will play a crucial role in the transformation from an economy based on fossil fuels to one relying on renewable resources. Hence, besides being a source of raw material for the forest industry, in the future, forests are expected to increasingly contribute to the production of energy as well as providing a wide range of environmental and social services. Thus, the objective of the present study is to assess the short-term and long-term potential for increasing sustainable wood supply in the EFINORD countries. Present practices and prospects for intensive forest management have been assessed using information from a questionnaire complemented by compilation and evaluating of national forest inventory (NFI) data and other forest sector relevant information. The study indicates a striking variation in the intensity of utilisation of the wood resources within the EFINORD region. For the region as a whole, there seems to be a substantial unused (biophysical) potential. However, recent NFI data from some countries indicate that annual felling rates can be underestimated. If felling rates are higher than currently recognised then, given the increased demand for wood-based energy, there appears to be a need to discuss strategies for large-scale implementation of more intensive forestry practices to ensure that the availability of wood resources in the future can meet an increasing demand in the EFINORD countries.

The EU Timber Regulation and FLEGT Action Plan aim to combat illegal timber logging and trade, and improve forest governance. In 2015, FLEGT has been in force for 12 years, and the EUTR for two years. What does scientific evidence say about the effectiveness and impacts of these policy measures? The results of the new EFI policy study “Assessment of the EU Timber Regulation and the FLEGT Action Plan” have been presented at a ThinkForest seminar at the European Parliament, Brussels on 21 April.

Raised public concern in the European Union (EU) about the legality of its timber imports has pushed the European Commission to raise its standards and legality demands for wood imports. Combining literature reviews, structured interviews and trade data analyses, this study assesses the potential influence from Forest Law Enforcement Governance and Trade (FLEGT) (with its Voluntary Partnership Agreements (VPA) system and new legislation EU Timber Regulation (EUTR)), and third party verification schemes on the timber trade between tropical countries and Europe. These instruments have the potential to reduce the amount of illegally sourced timber being placed on the market, and they seem to have resulted in both increasing support of legality verification and certification uptake. However, there are signs of increased ambiguity in trade that could originate as a side effect of the transition towards a stricter regulation for tropical timber. Such ambiguity is explicitly taken into account here. Possible consequences from increased ambiguity are substitution of oak lumber for tropical hardwood lumber, and a diversion of exports of tropical timber to destinations with a less stringent regulatory framework than the EU. Evidence of these trade patterns in the literature reviews,