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Carl Nolander
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New dissertation recommends increased allocation of protected forest

Published: 21 October 2021

It would be expensive and impractical to increase the proportion of forests used as carbon sinks using taxes as a policy instrument. A more effective way is to increase reserves of protected forests.This is one of the conclusions in a new dissertation in economics from Luleå University of Technology about potential conflicts between ecosystem services, biofuels and traditional raw material use in Swedish forestry.

In Sweden's conversion process towards a fossil-free, circular economy, the focus has been on the forest as a possible source of biofuel and as a carbon sink, ie a resource that for a longer period binds more of the atmosphere's carbon dioxide than it emits. However, the rising demand for biofuels may conflict with forest ecosystem services and the traditional forest industry. Ecosystem services are defined here as positive values that the forest provides to society, but which cannot always be commercialized, such as berries and mushrooms, health-promoting recreation, hunting, habitats for animals and plants, and water purification.

The dissertation analyzes the consequences for other forms of resource utilization if ecosystem services increase, how sensitive the traditional forest industry is to price increases due to increased competition from ecosystem services and the value of ecosystem services in Swedish forests and where they are located in the country.

We economists often try to price goods. We therefore like taxes on goods and services that are outside the market, including various ecosystem services, as a way to get the market to take environmental considerations into account, says the author of the dissertation Carl Nolander.

Subsidies and taxes are not recommended

With regard to the ambition to increase the proportion of forests that can function as carbon sinks, however, he advises against direct payments to forest owners. A subsidy on growth combined with a tax on felling would certainly extend the rotation time (time between sowing and final felling) for the forest and thereby the time that the forest can absorb carbon. However, the measure would affect different forest types, which grow in different parts of the country, differently. It would also be expensive for society. 

The forest that has the highest carbon uptake capacity and recreational value is older forest, which therefore also has the highest timber value. It is better therefore to increase the sale of protected forest and compensate the forest owners for the financial loss.

Demand for forest raw materials is likely to increase and then prices will rise. According to the dissertation, it is primarily the paper and heating industry that is sensitive to price increases, while the wood products industry will cope better in the increased competition by being able to pass on rising costs to its customers.

Mapping of the forest stock

Through a survey and modeling of the forest stock in Sweden, Carl Nolander concludes that the forest's most important ecosystem services are carbon sinks, recreation and to maintain biodiversity. The highest values for both carbon sinks and recreation are found in Skåne, while the extensive forest stands in Norrbotten and Västerbotten absorb the most carbon per year, while at the same time they have comparatively low recreational values.