EGON GLESINGER
Paper read at the Palazzo Vecchio in Florence on 16 February 1963 before the Italian Academy of Forestry Sciences at the inauguration of the academic year.
Address by the Director, Forestry and Forest Products Division
By unanimous vote the General Assembly of the United Nations decided in December 1960 to declare the period of 1961 to 1970 as the Development Decade. The official interpretation indicates that this implies the determination of all member governements to cooperate in endeavors to ensure that by the end of this decade the average increase in national income will not be less than five percent per annum.
With regard to Europe this world-wide resolution, which in fact was primarily aimed at the underdeveloped regions, is paralleled by a decision of the Organization for Economic Cooperation and Development (OECD), adopted shortly after the creation of that new body, to orient the economic policies of its member governments toward the achievement by 1970 of a gross product that would be 50 percent higher than in 1960. This would involve an average annual growth rate of slightly more than four percent and has been accepted to apply independently to North America on the one hand and to all of western Europe on the other.
One of the many striking aspects of these two solemn declarations is undoubtedly the fact that quantitative growth targets have now been accepted as basic elements of economic policy by the leading governments in the western world. This constitutes an important innovation. While systematic planning has long been practiced in the U.S.S.R. and the other socialist countries of eastern Europe, it has been customary in western Europe and North America to consider broad planning as not reconcilable with the principles of a free enterprise economy. This has now changed, since a corollary of the adoption of a growth target is the elaboration of some kind of plan to achieve the declared objectives. Moreover, it is clear that an over all figure for national income or gross national product (GNP) is rather meaningless unless it is broken down into a substantial number of the elements of which either of these broad aggregates are composed, such as, for example, the output of key industries and of agriculture, the consumption of certain key commodities, the structure and size of foreign trade and of investments, etc.
It is here that an important distinction between the so-called " free economies " of western Europe and the planned socialist economies needs to be made. The five-year plans prevalent in the latter countries attempt to spell out in detail how many houses should be built and where, how much steel should be produced in each factory, and how many new mills are to be built - and these plan figures eventually become compulsory objectives laid down by law. In western Europe and North America no such detailed plans have been introduced. Instead, attempts are being made by governments and by industries to estimate consumption and production for 5, 10, or even 20 years ahead, in order to determine whether there will be a reasonable correspondence between supply and demand, and to plan appropriate steps to adjust production to prospective requirements.
These forward estimates are called projections. The term has been deliberately chosen, to make it clear that these figures are in no way prophecies. They are simply logical conclusions resulting from known past facts and explicitly stated assumptions regarding future developments. If for instance the assumption is made that by 1970 Italy will have one million more families than today, and if by then the Italian people had, say, 50 percent more income than at present, then it is possible to indicate the number of new dwellings that would be needed. The explicit statement of the assumptions is, of course, essential. For, if by 1970 the national income is smaller than assumed, then the demand for new dwellings would be correspondingly lower. Yet the original projection is still useful because it gives an order of magnitude which people need to decide investments and many other actions; also, once the relationship between assumptions and their effects has been clarified it is rather easy to revise the projected number of dwellings upward or downward and thus gradually improve each projection.
With the adoption of official targets for economic growth, projections are increasingly penetrating all sectors of Europe's economy. The concept is somewhat new - so new that I had some trouble finding a generally accepted Italian term for the English word "projection" when I was preparing this lecture. There can, however, be no doubt that in today's world the concept has become almost indispensable.
This inevitably raises the question, why was this need for projections not felt before? In my opinion the growing emphasis on projections is due to three developments, all interrelated. First, the great improvement in statistical information and techniques which has occurred since the war. Secondly, the better appreciation of the relationship between the various magnitudes in the economy - the advance in social accounting. These two elements have evidently gone hand-in-hand. Improved statistics have deepened and made more precise our knowledge of how the economy works, and this knowledge has led to further improvements in the statistics available for analysis. And the third development, which to some extent underlies the other two, is economists and statesmen have had to abandon their concern for stability and equilibrium and have become increasingly preoccupied with problems of growth.
Thirty years ago it would have been almost impossible to formulate general growth targets, since the majority of European countries did not even know the size of their national income or annual product. As for growth, it may be well to remember that Europe's industrial production (the only major item for which statistics are available) increased in the last prewar decade by roughly 25 percent, but that the corresponding figure for the decade of the fifties was around 85 percent. Most countries are hoping to do as well or better during the present decade of development, which one might one day come to regard also as the decade of targets and projections.
Turning now at last to forestry, I feel sure that nobody in this audience would dispute the fact that - irrespective of whether we like or dislike the approach - the general adoption of projections makes it imperative to do so for forestry as well, since it constitutes a major sector of the European economy. I am particularly attracted by this opportunity to review today the impact of projections on forest policy, because European forestry provides an almost ideal illustration of one of the most significant advantages resulting from the use of projections, namely to draw attention to undesirable trends and to prospective maladjustments, that call for immediate corrective actions and policy decisions at the highest level. This will also help us to understand the fundamental difference between prophecies and projections. By discovering from projections what might happen if present trends and policies were allowed to continue, European governments and industries will be compelled to see to it that developments take a different course. In this way it is to be expected - and hoped - that the future will be in many ways different from the projections we are making today.
It is a rather fortunate accident that we possess today for European forestry a fairly solid set of facts and statistics, which enables us not only to look ahead but to check the successes and errors of previous exercises.
Serviced by a joint FAO/ECE secretariat, there has existed in Geneva since 1947 a European Timber Committee which co-operates closely with FAO'S European Forestry Commission. It was in 1951, that is as reconstruction approached completion, that FAO and the Economic Commission for Europe (ECE) decided to undertake a study of European timber trends in order to determine whether governments and industries should prepare for a slump, or go on expanding and investing. The study, which was published in 1954 after three years of work, is based on projections of wood demand in 1960, on the assumption that Europe's gross product would then be 50 percent higher than in 1950.
The projections were made for end uses and revealed rather striking discrepancies. To give a few examples: we found that wood needs for housing would rise between 1950 and 1960 by 23 percent, but that the round-wood equivalent of timber and paper for packaging would increase 63 percent and that newsprint consumption would almost double. Against that, the wood needs of the transport sector were likely to remain unchanged, agriculture would use six percent less industrial wood than in 1950 and for fuelwood we anticipated a drop of roughly 25 percent.
The next step was to pull all these estimates together by major wood categories. This exercise revealed that consumption of all types of industrial wood would rise by 33 percent during the decade, that is, from 170 to 225 million cubic meters. This was particularly surprising since the corresponding figure for the prewar decade (1928 to 1938) was only 14 percent.
Needless to say, FAO and ECE were severely criticized for such apparently exaggerated predictions. Our repeated reminders that these were projections and not prophecies remained largely unheard and did not change a general attitude of doubt toward the study.
You will be interested to hear that we have recently had opportunity to compare our projections with the actual performance of 1960. The most important conclusion that emerges is that our expectations have been rather closely fulfilled, and that the relatively small differences that have occurred are all due to the fact that our projections were not sufficiently bold. For sawnwood we underestimated consumption by 10 percent, for woodpulp by 12 percent, and for all industrial wood the error was 9 percent. Most of this error is due to excessive caution in our assumption about Europe's economic growth. By revising our projections 10 percent upward to take care of increased general growth, one finds that wood consumption in 1960 was within a few percent of our expectations.
My time is too short to talk about many fascinating details behind the global figures I just gave. I cannot, however, proceed without drawing attention to the fact that, in the decade from 1950 to 1960, while Europe's economy expanded by 65 percent, sawnwood consumption increased only by 23 percent. In other words sawnwood has been heavily replaced and its use increased only about one third as fast as Europe's gross product.
The Timber Trends Study was not confined to consumption estimates. Its second part dealt with forest output, and here our first findings were really alarming. A review of felling programs submitted by all European forest services showed that in the face of a heavy rise in demand it was planned to reduce the annual cut even slightly below the 1950 level, leaving a gap of some 80 million cubic meters. Personally, I believe that this early discovery of the large prospective gap between Europe's prospective needs and roundwood supplies, will remain the first basic and historic contribution of the technique of projections to modern forest policy.
Of course we did not stop there, but proceeded to investigate the possibilities of avoiding this gap and came out with a set of three connected proposals which were:
(a) to raise the annual cut of industrial wood from 160 to roughly 200 million cubic meters - a substantial portion of this increase was to be found by accepting for industrial use what had hitherto been regarded as fuelwood;(b) to increase Europe's imports of wood, especially in the form of sawn timber;
(c) to achieve some further savings in wood use, and to convert increasing amounts of wood waste into industrial products.
These proposals again met with much criticism. A group of conservative foresters and restriction-minded industrialists even went on record to warn that the adoption of a dynamic forest policy as advocated by our study was not only unnecessary, since our estimates of need were much too high, but that it would be incompatible with sound forest policy and the principles of sustained yield to raise the annual output of Europe's forests by some 40 to 50 million cubic meters of industrial wood.
Once more, performance was far better than we expected. According to our latest statistics, Europe produced in 1960 as much as 217 million cubic meters of industrial wood, that is, almost 20 million cubic meters more than our study had regarded as possible. To some extent this excellent result is due to an improvement in statistics but, even after making due allowance for these discrepancies, the actual output in 1960 was some 50 million cubic meters higher than in 1950. In ten years an expansion had been achieved which was larger than the increases registered between the outbreak of the first world war in 1914 and the end of the second world war in 1945. And all this, despite the alarming rumors about the heavy destruction suffered by Europe's forests in two wars.
Results in regard to trade were also in line with expectations. Since 1953 the Soviet Union has again become a major supplier of sawn timber and, to a lesser degree, of pulpwood. At the same time, North America stepped up her paper supplies, while European imports of hardwoods from Africa and Asia rose to several times their earlier level. Thanks to these imports, Scandinavia and other traditional exporters of timber, paper and various forest products were thus able to maintain and even increase substantially their overseas sales, although Europe's net balance underwent an important change. In 1950 the region had been a net exporter of some 4 million cubic meters of roundwood equivalent, but by 1960 Europe had become a net importer of some 14 million cubic meters.
The final adjustments needed to balance supplies with demand were rather marginal. The relative prices of wood rose somewhat in regard to its competitors (cement, steel, etc.), but not excessively so, and despite the usual short-term fluctuation the decade was a period of rather stable markets and prices.
I hope you will forgive me for dealing at such length with the last decade, but the unique experience which it provides for our first exercise with projections enables us to understand better the usefulness and the limitations of applying projections to forest policy.
That decade was characterized not only by a rapid increase in Europe's wood consumption but also witnessed a sharp rise in wood and paper sales from abroad. It is conceivable that similar developments - although probably of smaller magnitude - would have taken place without the FAO/ECE projections, but I believe that the widespread diffusion and discussion of our first Timber Trends Studies helped to achieve the adjustments of supply, demand and trade without such major crises as had been experienced for instance during the interwar period. Above all, however, these projections have started to alert forest administrations and governments to the need for stepping up the output of industrial wood at a hitherto unknown pace.
Let me now conclude by mentioning shortly what the latest projections suggest with regard to the next 16 years. I am happy to have as a basis for these remarks the very preliminary results of the Reappraisal of European timber trends covering the period 1960 to 1975, which is nearing completion.1
1Since the results will not be published for another year and are at this stage rather provisional and subject to change, I must confine this part of my remarks to orders of magnitudes and trends. I shall also indicate some rather personal conclusions which, however, do not reflect FAO policy and thinking. I should be grateful if the tentative nature of my remarks regarding the next 15 years were duly stressed in possible extracts or statements.
It appears rather certain - as was to be expected - that much the same trends as those experienced in the fifties will continue during the coming decades. Assuming, in accordance with the OECD growth target, that Europe's gross product in 1976 will be 90 percent higher than in 1960, the study finds that demand for industrial wood might rise during that period by another 100 million cubic meters.
The key question to be asked is of course where are these 100 million cubic meters to come from? And again, there are three ways for filling that gap, i.e., heavier feelings, imports, and heavier substitution. The final answer will be a combination of all three, but personally I favor this time imports and feel that one should be rather cautious trying to close the gap by heavier fellings and heavier substitution.
Let us first look at forest capacities: FAO's inquiries indicate that it should be possible to raise during the next 15 years the annual output of industrial wood by some 50 million cubic meters. This increase could be achieved without any damage to growing stock. Probably it will again be found that this estimate is too conservative and that better logging practices, new access roads, and further conversion of fuelwood to industrial raw material could provide somewhat more than is now anticipated. Quick-growing plantations could obviously raise raw material supplies of the pulp and board industries by much more, but little of that can be expected by 1975. And by the time new plantations contemplated now in 1963 achieve their full yields, requirements will obviously have leaped further ahead. This is one of many reasons why I believe that Europe's old growth forests should not be exposed to further overcutting. Moreover, I do not believe that one million cubic meters of plantation poplars or eucalypts should be regarded as a full substitute for one million cubic meters of old growth conifers or even beech and oak. Hence these old natural forests should, in my opinion, be managed with a view to maintaining and improving their growing stock and yield, unless thorough investigations lead to a new and altogether different policy with regard to these natural forests.
Substitution is obviously another possible alternative and there are, of course, always strong reasons for replacing a raw material when it becomes scarce and expensive. Also modern techniques tend to favor cement and metals, especially in building and other mechanical uses, in their fight against wood. But we all know that wood possesses many unique qualities. I am deeply convinced that only a fraction of the substitution we have seen during the past 60 years is due to the technical superiority of other materials and that most of the substitutions came as the direct and indirect results of insufficient supplies and an excessive rise in the relative cost of wood.
Yet the fact remains that, both in Europe and even in North America, wood has suffered enormous losses in its outlets and that these losses continue. To the extent that our statistics can be trusted, Europe's economy (or at least industrial production) grew between 1913 and 1938 at the same rate a& the consumption of industrial wood, which means that both rose in that period by roughly 20 percent. Since then, however, substitution has made itself Increasingly felt and by 1975 the index of Europe's GNP is assumed to be at 350 percent of 1938, but demand for Industrial wood is only expected to be somewhere around 180 percent. Despite the spectacular rise in paper and board consumption, total use of industrial wood would thus increase at only half the rate of economic expansion.
This is due primarily to heavy substitution in the sawn timber sector, as evidenced by the fact that its 1975 index is expected to be somewhat below 150 (percent of 1938), which means that:
(a) at a time of rapid economic growth, sawnwood consumption has been almost stagnant, and
(b) that the average amount of wood per house, per chair, per ton of coal, etc., would be roughly 60 percent lower in 1975 than it was in our lifetime at the outbreak of the second world war.
Even so, FAO/ECE projections indicate a theoretical gap of some 40 to 50 million cubic meters in 1975. The question we must ask ourselves is not whether the anticipated substitution underlying these figures is excessive but whether we should allow it to go even beyond these figures?
Of course, since we are not living in fully planned economies, these substitution trends are not easy to control. But I submit that foresters must unite to arrest - and in due course reverse - this trend, for if we allow it to continue the day will come when wood will no longer be used in large quantities except as raw material for pulp and board. Now if sawn timber and other mechanical forms of wood were to suffer the fate of fuelwood, it is questionable whether forests would continue to be major elements in the economy of modern nations. I am sure I need not develop the dangers of such a trend, not only for the private interests of forest owners but for the possibility of insuring the other multiple functions of forests in regard to soil conservation, flood protection and water stabilization and reservation.
Yet this may gradually happen unless we see to it that the rising needs of Europe's expanding economy are met from ample supplies of suitable wood at reasonable prices. There are many who doubt such a possibility in the long run. I do not belong to that group, but clearly a major effort is needed if we want to change the dangerous trend which has characterized the last 25 years.
Imports are, then, a quick and easy remedy. It must be remembered that they cannot be regarded as the ultimate solution for, if Europe's timber needs continue to rise in harmony with the region's general economy, the additional needs of timber, paper and board should reach proportions that go far beyond the quantities that can easily be shipped to Europe over great distance from faraway lands. But for many years to come it is my belief that imports are the soundest way to meet large portions of Europe's rising needs, without endangering our forests, and without encouraging further substitution. Such imports could come from North America and from the Soviet Union, but the most desirable course would be if as large a portion as possible were to come from the less developed countries. It is well known that the development of these countries depends to a large extent on their ability to increase their earnings of foreign currencies, but that efforts to step up their exports of food or standard industrial products are meeting heavy competition and resistance from farmers and industries in Europe and North America. Large purchases of forest products might be one way of increasing the flow of trade from the underdeveloped world without interfering with the interests of European producers. This aspect is likely to attract statesmen, economic planners and even industrialists, who usually pay only lip service to forestry, but are not normally too concerned about the future of Europe's forests and the markets for their products. Such support however is needed for, if underdeveloped nations are to contribute already 10 years hence substantial amounts of forest products to Europe's timber balance, they will need considerable help to develop their forest output and industries at the necessary pace.
This short review of the outlook for European forestry provides another illustration of the important contribution which projections could and should make to the formulation of sound forest policies. If this approach were generally adopted, it would mean far more than adding a further refinement to the traditional methods of forest management. In fact it would mean a minor revolution.
Taking a long historical perspective, forest utilization started everywhere as a mining operation, that is, the use of materials, which nature places ready-made at the disposal of man.
This phase has been followed by systematic resource management, aimed at achieving a sustained yield of wood while at the same time protecting the growing stock. This was a necessary reaction to forest destruction, but the fact that it started as a move to protect the forest against destruction by man has left some clear traces, among which a certain conservatism among foresters whenever the allowable annual cut is being determined and a tendency toward systematic underestimates of growing stock and yield are the most significant in the present context. Moreover, even though economic factors are taken into account when management plans are being established the main emphasis in establishing annual cut is being placed on physical and technical considerations.
With the introduction of projections into this process the concept of forestry would move into a new, third phase. Long-term plans of forest output would need to be established, primarily with the objective of meeting local, national and international needs at reasonable cost. Sustained yield and resource protection would still remain the basis for the management of natural forests, but instead of planning output - as hitherto - in accordance with the capacity of existing forests, one would try to adjust production to effective demand. And, since forests take a long time to grow, projections of future demand become sine qua non in achieving a sound balance between timber supply and requirements.
I now ask your permission to conclude this discussion of methods by stressing the magnitude of the task that lies ahead.
It is reasonably safe to assume that gross national product in Europe will continue to double every 20 years. If timber is to hold even its reduced present position in construction and to retain its practical monopoly as raw material for paper and board, this implies that Europe's output of industrial wood should also double every 20 or 30 years. This means that, by the year 2000, Europe's demand will be at the level of 500 to 600 million cubic meters of industrial wood per annum, and that the 1,000 million cubic meters will be passed some time between the years 2020 and 2030.
How fundamentally different this is from the past is best understood if one recalls that Europe's consumption in 1910 was only 140 million cubic meters and that 40 years later it was still at 170 million cubic meters. Of course this change will only be possible as a result of heavy investments in forests, communications and forest industries, the widespread, introduction of quick-growing species, application of high yield management, and the adoption of a world-wide approach in systematic attempts to balance demand and supply. But all this will call inevitably for long-term planning of wood production, tree planting and land use. To this end projections of demand will constitute the key that opens the door to the new forest policy of tomorrow.
Let me conclude by quoting a well-known English historian: Prevision is one of the matters in which man differs from lower animals, and the civilized man most from the uncivilized.
