ECE/TIM/DP/11 GENEVA TIMBER AND FOREST DISCUSSION PAPERS ETTS V WORKING PAPER THE POLICY CONTEXT FOR THE DEVELOPMENT OF THE FOREST AND FOREST INDUSTRIES SECTOR IN EUROPE TABLE OF CONTENTS

United Nations Economic Commission for Europe Food and Agriculture Organization of the United Nations

Timber, Section,
Geneva, Switzerland

EUROPEAN FORESTS AND TIMBER:
SCENARIOS INTO THE 21ST CENTURY
(CONSUMPTION, PRODUCTION, TRADE, RECYCLING AND ENERGY)

by

T. J. Peck and J. Descargues

UNITED NATIONS
New York and Geneva, 1997

ABSTRACT

This Working Paper presents the outlook for policies in the main sectors influencing the forest and forest products sector: demographic and social affairs, economy, energy, environment, landuse and regional development, agriculture, industry, trade, construction and the public sector. For each, policy issues and options are explored, as well as their implications for the forest and forest industries sector. A “base scenario” for future policies in these areas is also presented.

ECE/TIM/DP/11

UNITED NATIONS PUBLICATION

ETTS V WORKING PAPERS

This is one of a series of papers to accompany the fifth study of European timber trends and prospects (ETTS V), issued in August 1996 with the reference ECE/TIM/SP/11. The ETTS V Working papers contain material which is too technical, too detailed or too voluminous for inclusion in the main study, such as results and projections by country or methodological discussions. Readers are referred to ETTS V itself for an explanation of the main principles and outline of the study.

Further information about ETTS V and other documentation is available on request from the ETTS V coordinator:

Mr. C. Prins
Chief Timber Section
UN/ECE Trade Division
Palais des Nations
CH 1211 Geneva 10
Telephone: +4122 917 2874
Fax: +41 22 917 0041
E-mail: christopher. [email protected]

PREFACE BY THE SECRETARIAT

It is increasingly recognised that public policy, notably for sectors other than the forest and forest products sector, is one of the most important factors determining the outlook for that sector. Policy for such sectors as environment, rural development, economic development or energy will have as much influence on the sector (and possibly more) as forest policy. Yet the outlook for “non-forest policies” is extremely difficult to analyse in any meaningful and objective way. ETTS V recognised early in the process that this was a priority area: there was an ad hoc meeting in January 1994, prepared by an informal meeting in January 1993. The ad hoc meeting based its discussions on a document, which reviewed the present situation and outlook for the main policy sectors which may influence the forest sector and the possible interactions with the forest sector. It also proposed a base scenario for the policy context in the relevant “non-forest” sectors. This process resulted in a revised version of the policy context document, which provided the foundation for chapter 2 of ETTS V.

This Working Paper contains the final version of the policy context paper, revised to take account of the ad hoc meeting's comments. It was prepared by Messrs. T.Peck and J.Descargues, with the help of an advisory committee led by Professor Franz Schmithüsen of the Chair of Forest Policy and Forest Economics of the Swiss Federal Institute of Technology, Zurich. The work was funded by the Swiss government, and the Office National des Forêts of France contributed the services of Mr. Descargues. This report has also been issued by the Chair of Forest Policy and Forest Economics as No. 14 of the Forstwissenschaftliche Beiträge der Professur Forstpolitik und Forstökonomie.

The secretariat takes this opportunity to thank Mr. Peck, Mr. Descargues, Professor Schmithüsen and Mr. de Montalembert, then Director of the Forest Policy and Institutions Division of FAO Rome, for their invaluable contributions, as well as the many individual experts (listed in the Acknowledgements) who contributed their experience and expertise to the work. Thanks are also due to the Swiss authorities for their vary generous support of the project and the Office National de Forêts for making available the services of Mr. Descargues.

FOREWORD

This study has been carried out in the context of the work of the UN/ECE Timber Committee and of the FAO European Forestry Commission, which are the highest inter-governmental bodies dealing with the forestry sector for the whole of Europe. Both bodies have stressed the growing interactions between forest policies and other policies relevant to the development of the forest and forest products sector, such as agriculture, environment and regional development. They requested that the policy framework, within which the forestry sector is evolving, should be analyzed and taken into account in the preparation of the new European Timber Trends and Prospects Study (ETTS V), scheduled for publication in 1995/96, which will analyze the outlook for the supply and demand for wood and wood products in a medium to long term perspective.

The preparation of this discussion paper has been a concerted effort of several organizations. The scope and objectives within the preparatory process of the Timber Trends Study have been set by the Timber Section of the ECE/FAO Agriculture and Timber Division and the Forestry Policy and Planning Division of FAO. The Swiss Forest Agency of the Federal Office of Environment, Forests and Landscape has made available the necessary funds for financing the work and in particular the recruitment of qualified expertise. The Chair of Forest Policy and Forest Economics of the ETH Zurich has accepted the responsibility to engage the study, and to monitor its progress. The Office National des Forêts of France has contributed the participation of one of its Senior Advisors. It has been possible to achieve a considerable amount of work in a comparatively short time (May 1993 to September 1994) thanks to smooth and efficient collaboration which is gratefully acknowledged.

The work which has been undertaken is of an innovative and exploratory nature in the sense that it is probably the first time that an attempt has been made at a global assessment of policy impacts on the forest and forest industry sector.

The study is a contribution to a more consistent understanding of the functional relationships between various policy segments which, implicitly or explicitly, address forests, forestry and wood processing. It is hoped that it will encourage further forest policy research in an area where much work remains to be done. The Chair of Forest Policy and Forest Economics of the ETH Zurich is including the study in its Series “Forest Research Contributions” in order to make its findings available to a larger academic audience.

Hyperlinks to non-FAO Internet sites do not imply any official endorsement of or responsibility for the opinions, ideas, data or products presented at these locations, or guarantee the validity of the information provided. The sole purpose of links to non-FAO sites is to indicate further information available on related topics.

TABLE OF CONTENTS

TABLE OF CONTENTS
LIST OF TABLES, CHARTS AND FIGURES
ABBREVIATIONS AND SYMBOLS
ACKNOWLEDGEMENTS
EXECUTIVE SUMMARY
EXECUTIVE SUMMARY CHART

1. GENERAL ASPECTS
1.1 Background
1.2 Terms of reference of the study
1.3 Methodology for the analysis by policy area in chapter 2
1.4 Methodology for synthesising the results of the analysis and formulating a base scenario in Chapter 3

2. ANALYSIS BY POLICY AREA
2.1 Policy Area A: DEMOGRAPHY AND SOCIAL AFFAIRS
2.1.1 General developments
2.1.2 Policy issues and options
2.1.3 Implications for the forest and forest industry sector
2.2 Policy Area B: ECONOMY
2.2.1 General developments
2.2.2 Policy issues and options
2.2.3 Implications for the forest and forest industries sector
2.3 Policy Area C: ENERGY
2.3.1 General developments
2.3.2 Policy issues and options
2.3.3 Implications for the forest and forest industries sector
2.4 Policy Area D: ENVIRONMENT
2.4.1 General developments
2.4.2 Policy issues and options
2.4.3 Implications for the forest and forest industry sector
2.5 Policy Area E: LAND USE, RURAL AND REGIONAL DEVELOPMENT
2.5.1 General developments
2.5.2 Policy options and issues
2.5.3 Implications for the forest and forest industries sector
2.6 Policy Area F: AGRICULTURE
2.6.1 General developments
2.6.2 Policy issues and options
2.6.3 Implications for the forestry and forest industry sector
2.7 Policy Area G: INDUSTRY
2.7.1 General developments
2.7.2 Policy issues and options
2.7.3 Implications for the forest and forest industries sector
2.8 Policy Area H: TRADE
2.8.1 General developments
2.8.2 Policy issues and options
2.8.3 Implications for the forest and forest industry sector
2.9 Policy Area I: CONSTRUCTION
2.9.1 General developments
2.9.2 Policy issues and options
2.9.3 Implications for the forest and forest industry sector
2.10 Policy Area J: THE ROLE OF THE PUBLIC SECTOR
2.10.1 General developments
2.10.2 Policy issues and options
2.10.3 Implications for the forest and forest industries sector

3. SYNTHESIS, DISCUSSION AND PROPOSAL FOR A BASE SCENARIO
3.1 Synthesis and discussion
3.1.1 Policy areas with potentially major impacts on the FFI sector
3.1.2 Identification of the potentially most important policy changes for the FFI sector
3.1.3 The scale and direction of the impact of policy changes
3.1.4 The timescale of the impact of policy changes
3.1.5 Summary of the discussion
3.2 Proposal for a base scenario
3.2.1 Assumptions about main developments
3.2.2 Scenarios of major policy changes
3.2.3 Stimulus to the economy
3.2.4 Energy
3.2.5 Environment
3.2.6 Agriculture
3.2.7 Trade
3.2.8 The countries with economies in transition (CITs)
3.2.9 The role of the public sector
3.2.10 Consistency of the selected scenarios

4. CONCLUDING REMARKS

ANNOTATED BIBLIOGRAPHY

Some facts about the Timber Committee
UN-ECE/FAO Publications

LIST OF TABLES, CHARTS AND FIGURES

Table

1. Estimates and projections of world population, 1950 to 2025

2. Assumptions on growth of Gross Domestic Product (GDP), 1970–1990 (actual) and 1990– 2000 (projected)

3. Four scenarios of growth of Gross Domestic Product (GDP), 1990 to 2015

4. Growth rates of gross agricultural production and domestic demand (all uses), 1970– 90 (actual) and 1988/90–2010 (projected))

5. Economically active population in agriculture, 1990 to 2010

6. Merchandise trade by main exporting and importing areas in 1990

7. Scenarios for export growth, 1990 to 2015

8. Possible impacts on the forest and forest industries sector of changes in policy direction:

A. Demography and social affairs

B. Economy

C. Energy

D. Environment

E. Land use, rural and regional development

F. Agriculture

G. Industry

H. Trade

I. Construction

J. The role of the public sector

Chart

A. Relationship between ten policy areas and the four parts of the forest and forest industries sector

B. Development of relations with the wood-processing industries part of the FFI sector

C. Development of relations with the wood-producers part of the FFI sector

Figure

1. Share of different categories of natural resources in global energy supply, 1860 to 1985

2. World primary energy consumption, 1960 to 1985

3. Share of industrialised and developing regions in primary energy consumption by category, 1985

4. Final energy consumption by sector in western Europe, 1973, 1979 and 1990

5. Development of energy self-sufficiency by product in western Europe, 1973 to 1990

6. Contribution by sector of addition of “greenhouse” gases to the atmosphere

7. Contribution by sector of addition of carbon dioxide to the atmosphere

8. Composition of solid waste in industrialised countries

9. Main land uses in Europe (total)

10. Main land uses in Northern Europe

11. Main land uses in Europe other than Northern Europe

12. Main land uses in Sweden, 1983–85

13. Main land uses in former Federal Republic of Germany, 1985

14. Main land uses in Greece, 1981

15. Changes in land use in Europe, 1973 to 1988

16. Share of total construction in Gross Domestic Product in selected countries, 1980 and 1990

17. Share of value of construction, by sector, in 13 European countries in 1990

18. Gross Fixed Capital Formation (GFCF) in residential buildings as share of GFCF in total construction, 1980 and 1990

19. Gross Fixed Capital Formation (GFCF) in non-residential buildings as share of GFCF in total construction, 1980 and 1990

20. Dwelling completions in Europe, 1950 to 1990

21. Dwelling completions in selected countries, 1980 and 1990

22. Share of dwellings completed with 3 rooms or less in selected countries, 1980 and 1990

23. Share of dwellings completed in urban areas in selected countries, 1980 and 1990

24. Share of publicly built dwellings in total completions in selected countries, 1980 and 1990

25. Value of new non-residential buildings completed by sector in selected countries in 1990

Symbols

* Unofficial figure or estimate

- Nil or less than half a unit

.. Figure unknown or not available

ABBREVIATIONS AND SYMBOLS

ACKNOWLEDGEMENTS

The authors wish to thank, first and foremost, the principal sponsor of the study, the Swiss Forest Agency of the Federal Office of Environment, Forests and Landscape, Berne, as well as the French Office National des Forêts, Paris, which covered the salary component of Mr. Descargues' participation.

Secondly, we express our gratitude to the members of the Steering Committee, who provided invaluable guidance and support throughout: F. Schmithüsen,, Professor of Forest Policy and Forest Economics, Department of Forest and Wood Sciences, Ecole polytechnique fédérale, Zürich; M-R. de Montalembert, Director, Forestry Policy and Planning Division, Forestry Department, FAO, Rome; and C.F.L. Prins, Acting Chief, Timber Section, UN-ECE/FAO Agriculture and Timber Division, Geneva.

Helpful advice was also offered by, amongst others, P.A.Wardle, M.Paveri-Anziani and L.Lintu of the FAO Forestry Department and J.Vercueil, Director of the UN-ECE/FAO Agriculture and Timber Division. Other members of that Division provided comments and statistical and secretarial back-up, which was also greatly appreciated.

Given the wide range of issues covered and the authors' limited knowledge about many of them, the project could not have been carried out without the help of a large number of experts in different organisations. In the interviews with them, these experts were unfailingly co-operative and generous with their time and knowledge, and the authors acknowledge with deep humility the tremendous debt they owe them. In chronological order of the interviews, we wish to thank:

At FAO, Rome: M. Bral, Chief Service 1, FAO/World Bank Cooperative programme Investment Centre, M. C. Lins, Chief Agrarian Reform and Land Settlement Service and J. C. Liddell, Senior Officer, Land Tenure and Settlement Group, Human Resources, Institutions and Agrarian Reform Division, R. Brinkman,. Chief, Soil Resources, Management and Conservation Service, T. J. Aldington, Senior Policy and Planning Coordinator, Agriculture Department, A. Mekouar, Legal Officer (Environment and Forestry), Legal Office, R. J. Perkins, Director, Commodities and Trade Division, J. B. Tschirley, Environment Programme Officer, Environment and Sustainable Development coordinating Centre, T. K. White, Director, Policy Analysis Division, N. Alexandratos, Chief, Global Perspective Studies Unit and Coordinator of Agriculture Towards 2010, K. H. Schmincke, Director, Forest Products Division, and J.-P. Lanly, Director, Forest Resources Division. Ms. S. R. Stella-Ayazi in the David Lubin Memorial Library and Ms.F.Monti in the Forestry Library were most helpful in carrying out document searches.

At UN-ECE, Geneva: J.Budavari, Senior Economist, Agriculture Section, UN-ECE/FAO Agriculture and Timber Division, P.Rayment, Deputy Director, and J. Slater and B.Cohen, Economic Affairs Officers, Division of Economic Analaysis and Projections, m. Macura, Population Activities Unit, K. Leonhardt, Chief Human Settlements Section, L. Nordberg, Chief and R. Chrast, Economic Affairs Officer, Air Pollution Section, and M. Kokine, Officer-in-Charge, Environment Section, Environment and Human Settlement Division, K. Brendow, Director and Ms. J. Andorfer, Economic Affairs Officer, Energy Division. Ms. M. Milosevic, Research Assistant, FAO/ECE Agriculture and Timber Division, and Ms. V. Gavrilov, Reference Assistant, ECE Reference Unit, helped greatly with the search for and acquisition of documents.

At UNEP, Geneva: S. Jaakkola, European Programme Coordinator.

At OECD, Paris: A. Malarz, Relations with the Newly Independent States, Directorate for Food. Agriculture and Fisheries, G. Vickery, Principal Administrator and R. Loutz, Secretary of Committee on Industry, Directorate for Science, Technology and Industry, G. Viatte, Director, W. Legg Head of Country Studies and Environment Division and G. Bonnis, Economist, Directorate for Food, Agriculture and Fisheries, S. B. Wennerberg, Director, Office of Energy Technology and R & D, and L. Michaelis, Energy and Environment Division, International Energy Agency, P. Schwengels, Principal Administrator, Environment Directorate, W. Liebfritz, Head, Public Economy Division, N. Vanston, Head, Foreign Trade and Investment Division, and p. Sturm, Head, Resource Allocation Division, Directorate of Economic Affairs, J. de Miramon, Deputy Director, Trade Directorate, and P. Muheim, Rural Development Programme.

Special thanks go to j.-D. Clavel, Ministre, and his staff at the Swiss Delegation to OECD for making the arrangements for these interviews.

At GATT, Geneva: R. Eglin, Director, Technical Barriers to Trade and Trade and Environment Division.

At CEC, Brussels: B. Mallet and Ms. R. Roy, Global Environment, DX XI-Environment, Nuclear Safety and Civil Protection, Ms. M. Gillet, Recycling and waste paper, DX XI, F. Esteve Rey, Division Head, and W. Pieké, Administrator, DG IV-Competition policy, J. Wall and E. Martinez Rivero, Administrators, and Ms. I. Hertzog, DG III-Industry.

At WWF, Gland: C. Elliott, Forestry Adviser.

Other experts provided valuable comments on the Advance Version of the study, which was presented to the FAO/ECE ad hoc Meeting on the policy context of ETTS V, held in Geneva from 13-15 June 1994. Thanks are offered to the representatives of Austria, Finland, France, Ireland, Italy, the Netherlands, Sweden, Switzerland and the Commission of the European Communities at the meeting (list available from the FAO/ECE secretariat); and also to the following individuals who provided detailed written suggestions for improvements: F.C. Hummel, E.G. Richards, B. Solberg, and B. Strehlke.

The above-mentioned experts are the tip of an enormous iceberg of knowledge and experience in the organisations visited, not to mention in the national agencies and institutions of European countries, but the interviews with them were the most that could be achieved with the time and resources available. Thanks to them, the authors climbed some way up a steep learning curve and have tried, however inadequately, to pass on in the study a little of the knowledge they gained from them. It must be emphasised, however, that any shortcomings of the study, and possible errors in it, are the responsibility of the authors alone, and should not reflect in any way on all those who have tried to help them.

Parts of the Advance Version of the study were translated into French by the United Nations translation services in Geneva for the June 1994 meeting. For the revision of those parts and the translation of the rest (the major part) of the study, we are deeply indepted to p. Delduc and B. Cinotti of the Direction de l'Espace Rural et de la Forêt, Ministère de l'Agriculture et de la Pêche, France with financial help from the Office National des Forêts.

Finally, a special word of thanks goes to Mrs. D. Kohler of the Department of Forest and Wood Sciences, Swiss Federal Institute of Technology, Zurich, who undertook with great competence the daunting task of preparing this study for publication.

EXECUTIVE SUMMARY

The study is intended to serve as a basis for discussion on some of the main policy issues and options that are having or may have an impact on the forest and forest industries (FFI) sector over the next 10 to 20 years, in particular on the supply and demand for wood and forest products; and to provide an input to the fifth in the series of FAO/ECE long-term studies on timber trends and prospects (ETTS V), now under preparation. It is based on the supposition that the policies having most influence on the sector are external to it, that is to say they are primarily concerned with other sectors.

Ten policy areas are examined (Chapter 2): Demography and social affairs; Economy; Energy; Environment; Land use, rural and regional development; Agriculture; Industry; Trade; Construction; and The role of the public sector. After a review of general developments in each area, the policy issues and options, particularly policy changes that are taking place or may do so, are discussed and then the implications for the FFI sector. The latter are considered for four parts of the sector: forest resource, forestry and wood supply; wood-processing industries; international trade in forest products; markets and demand for forest products.

The potential impact of changes in policy direction in each of the above ten areas is summarised and discussed in Chapter 3 of the study. A set of tables (tables 8 A…J) presents for each policy area the objectives, instruments or linkages with the FFI sector, the possible impact on the sector, the scale and direction of the impact on the supply and demand for wood and the timescale (how soon after a policy has been initiated an impact might begin to be felt). On the basis of the authors' subjective assessments, there were thirty-three cases with potentially high or very high impacts on the FFI sector out of a total of 176 (counting double for cases which could have both positive and negative impacts). A slightly reduced list of these is shown in the Executive Summary Chart. There were a further forty-five with potentially moderate impacts. These seventy-eight moderate, high or very high impact cases were grouped into seven major areas where changes in policy could have a significant impact on the FFI sector over the coming one or two decades:

1. Policies to stimulate economic expansion;
   
2. Policies to stimulate efforts to find alternative sources of energy and conserve it;
   
3. Policies to intensify protection of the environment and promote sustainable development;
   
4. Policies relating to rural and regional development, including adjustments to agriculture;
   
5. Policies to improve the quality of life;
   
6. Policies relating to industry and trade matters, other than those aimed primarily at stimulating the economy (covered in 1 above);
   
7. Policies to change the role of the public sector.

A further area is partly included in several of the above, but deserves specific attention, namely:

8. Policies related to the transition of the economies of central and eastern Europe from planned systems to forms of market economy.

Most (two thirds) of the impacts rated moderate, high or very high on the impact scale would affect supply of wood and its derivatives; the remainder would affect demand. There are five policy areas where impacts would be very largely on supply: Environment; Land use, rural and regional development; Agriculture; Industry; and The role of the public sector. For four others, the impact would be equally on supply and demand: Demography and social affairs; Economy; Energy; and Trade. The only policy area where the impact would be mostly on demand is Construction.

With regard to the direction of the impacts that policy changes would make, over three fifths (in terms of numbers of policy components but not necessarily of their combined weight of impact) of those on wood and wood products supply would be expected to result in an increase, notably the policy changes in the areas of economy, energy, agriculture and industry; the remaining two-fifths would result in a decrease or have little net effect. As concerns demand, four fifths of the policy changes would be likely to stimulate it, notably those in the areas of economy, energy and construction.

According to the authors' judgement concerning the timescale of impacts (the lag between the policy changes and when the impact would begin to take effect), over 80 percent of those on wood supply would be felt in the medium (5–15 years) to long (after 15 years) term, with some of those in the environment policy area being exceptions (within 5 years). On the demand side all but a fairly small fraction (less than one fifth) could begin to have an impact within a short (< 5 years) or medium (< 15 years) timespan.

As a basis for discussion, the authors present a proposal for a base scenario. After listing assumptions about developments in the sectors covered by the study, they offered two alternative scenarios for the areas where policies are assumed to change direction. One of the scenarios was then selected for inclusion in the base scenario, which may be summarised as follows:

1. Stimulus to the economy - Further stimuli:
   Measures to reinforce economic growth and reduce unemployment in western Europe; construction and regional development targeted. (Rejected alternative: “Steady-as-she goes”).
2. Energy - Continued ample supply inhibits policy changes:
   No major disruptions to energy supplies; new taxes do not raise energy prices substantially. (Rejected alternative: A third energy price shock or firm government action or both).
3. Environment - Substantial progress on the environmental front: Strengthening of legislation on environmental protection, bio-diversity and sustainable development; and on waste management. (Rejected alternative: Laissez faire).
4. Agriculture - Active policies to promote alternative land uses: Considerable areas of land withdrawn from food production; alternative uses actively sought and supported. (Rejected alternative: Sharply reduced levels of agricultural support).
5. Trade:
   1. Substantial progress on environmentally-related trade issues: an enforceable and workable international agreement reached on national legislation relating to environmentally sensitive products. (Rejected alternative: Little progress in regulating trade in environmentally sensitive products);
   2. Europe adapts to changing structure of world economy and trade: while losing share of world trade, Europe would benefit from growth of new markets in economically emerging countries, notably China. (Rejected alternative: Negative impact of economically-emerging countries on Europe's competitivity).
6. The countries with economies in transition - Confidence re-established in the transition process: Steady progress in establishing foundation for renewed expansion; those countries attract increasing foreign investment. (Rejected alternative: Hesitant transition to a market economy).
7. The role of the public sector - Reduced public sector involvement:
   Public spending would be cut back, but with specific social objectives targeted; privatisation would continue throughout region, but at a decelerating pace. (Rejected alternative: Swing of the pendulum back towards more public involvement).

Six out of the eight scenarios (including the two for trade) are on the side of substantial changes in policies. There appears to be a reasonably high degree of consistency between the scenarios with two major exceptions, namely the less dynamic alternatives for energy and the role of the public sector when set against the others. Thus, without major incentives from a substantial rise in energy prices, the possibilities to enable wood and waste paper to play a larger role as alternative energy sources would be limited. Secondly, inability or reluctance to make available large amounts of public funds would make it difficult to achieve such objectives as fuller employment, development of alternative uses of agricultural land and greater provision of environmental and social services.

An FAO/ECE ad hoc meeting on the policy context of ETTS V, held in Geneva in June 1994, reviewed the advance version of this study and discussed in depth the authors' proposals for a base scenario. It agreed to take the scenario outlined above to serve as a point of comparison with other parts of ETTS V and as a starting point for sensitivity analysis. Its comments on the elements of the proposed scenario have been incorporated in section 3.2 of this study.

The implications of the proposed scenario for the forest and forest industry sector are mixed. Some elements imply stronger growth in demand for forest products and an increased role for forestry, not so much for its wood-producing role as for social and environmental services. There is the implication that the area of afforested land would expand, but at the same time some productive forest land would be transferred to protective and social functions. Perhaps the most significant implication is that, without a major change in the energy field, a number of key problems in the FFI sector, such as finding outlets for small-sized and low quality wood raw material and recycling of waste paper, will remain acute. As concerns trade, the implications are for the virtual elimination of trade in forest products from non-sustainably managed forests; but for increased opportunities for European producers to improve their international trading positions through import substitution or even to export more to other regions.

Finally, the study underlines the need for a continuing dialogue on policies between the FFI and other sectors leading to measures to integrate forest policies more closely with those for other sectors, especially in view of the increased importance given to the sector in recent years by the public and policy makers. The authors express the hope that, despite its shortcomings, which may be partly explained by its pathfinding nature, the study will help policy makers and their advisers to look at the FFI sector from a different perspective, and that it will generate fresh thinking and discussion about the development of the sector.

EXECUTIVE SUMMARY CHART

Selected policy components with potentially major impacts on the forest and forest industries (FFI) sector