First-ever comprehensive study on the impact of sustainability targets on forest use published

Sustainable forestry is an essential part of Finland's future success. Forests play a key role in the climate, biodiversity, and water targets to which Finland is committed. They are also vital for the economy:  in 2024, forestry and the forest industry accounted for just under 3.5 per cent of Finland's gross domestic product and 17 per cent of goods exports.

At the same time, forest management must prepare for the increasing effects of climate change, such as increasing drought and a rise in pest populations.

In a study commissioned by the future fund Sitra, researchers from the Natural Resources Institute Finland (Luke) and the Finnish Environment Institute (Syke) have formed a comprehensive view of what achieving these targets would mean in practice for forests as well as the economic impacts of these choices.

This is the first time in Finland that the entire spectrum of environmental targets and the economic impacts of the required measures have been assessed in a holistic manner.

“The key question is how to best combine success in reaching sustainability targets with the long-term economic success of the forest sector. Sitra is ready to act as a partner in finding answers and developing solutions to ensure Finland's well-being and its ability to renew,” says Mariko Landström, Senior Lead at Sitra.

Biodiversity can be put on a path to recovery

According to the study, Finland's goal of putting biodiversity on a path to recovery could be achieved in forests by combining nature-oriented forest management and conservation measures.

Biodiversity would be significantly supported by having deadwood and old, large trees in commercial forests reach 15 per cent of the levels in natural forests over the long term. Additionally, all tree species native to the site should be preserved. In one-fifth of the forests, more intensive measures would be required so that deadwood and old, large trees would reach 30 per cent of natural-state levels in the long run.

These more intensive measures would be targeted at fertile sites and areas near nature reserves. Furthermore, the most ecologically valuable ten per cent of forests would be protected in Southern Finland as well.

Improving the status of water bodies can be achieved, for example, by reducing drainage and leaving buffer zones for small water bodies, such as streams. The carbon stock, in turn, can be increased by methods such as extending forest rotation periods and investing in management activities that increase forest growth.

“There are significant synergies between these measures. Biodiversity and water protection measures also strengthen forest carbon stocks, benefiting the climate and improving forest resilience,” says Sampo Pihlainen, Senior Researcher at the Finnish Environment Institute.

Sustainability measures impact timber production

Measures that safeguard forest biodiversity and the condition of water bodies mitigate risks related to drought and insect damage, thereby benefiting forest owners. Furthermore, these actions benefit society more broadly by strengthening other vital ecosystem services, such as water purification, flood protection and positive health effects.

The study also assessed the direct impacts of sustainability measures on wood production. According to coarse modelling, the state of nature and water bodies can be significantly improved and the carbon neutrality target achieved through measures leading to an annual harvest approximately ten million cubic meters (about 15%) lower than current levels. This would mean a level of 60–65 million cubic meters. The result should be interpreted as indicative – the potential harvest level depends, for example, on the success of emission reductions in other sectors and the development of forest growth.

Given the current industrial production structure, this would mean a production decline of approximately 10 per cent in the forest industry. In energy production, the use of solid wood fuels would drop by slightly less than one-fifth.

The economic impacts will be smaller if Finland succeeds in processing wood into higher-value products than at present. In such a scenario, a smaller volume of wood yields greater economic benefit.

The study also identified significant uncertainties and information needs. Current data is insufficient to model exactly how much nature-oriented forest management safeguards timber production from the damage risks caused by a changing climate. More information is also needed on the extent to which identified measures enhance other ecosystem services and what their economic value is – for example, how much Finland benefits from cleaner waters.

“Measures addressing biodiversity, water quality, and climate have various impacts on timber supply and industry. Since we cannot yet calculate the full economic benefit produced by these measures, the changes are not reflected as investments; instead, the costs are emphasised,” highlights Jussi Lintunen, Associate Professor at the Natural Resources Institute Finland.

Researchers mapped potential policy instruments

The researchers also investigated various policy instruments through which these changes could be implemented. The work reviewed a wide range of tools, from minimum requirements in legislation to various subsidies and taxes. Measures can also be guided through the forest sector's self-regulation, such as voluntary certificates.

The study was carried out as a collaboration between dozens of researchers. During the process, forest sector stakeholders were invited to workshops to evaluate and develop the package of measures and policy instruments. Additionally, a citizens' panel was organised alongside the study to assess the social acceptability of the policy instruments.

“We hope that the study makes visible the choices required to reconcile environmental and economic targets. The identified gaps in data regarding the economic benefits of analysed measures also warrant attention. More information on this nationally significant issue would serve decision-making,” says Tatu Torniainen, Senior Lead at Sitra.

Finland's environmental targets in brief: Halt biodiversity loss by 2030 and putting nature on a path to recovery. Achieve good ecological and chemical status of waters by 2027. Reach carbon neutrality by 2035 and carbon negativity thereafter.