European timber trends and prospects: into the twenty-first century
The fifth study of European timber trends and prospects (ETTS V) was prepared for the Timber Committee of the UN Economic Commission for Europe (ECE) and FAO's European Forestry Commission. The major objective is to review the outlook for the supply and demand of roundwood and forest products as well as the balance between the two until 2020, while taking into account recycling, energy and trade issues.
The work was carried out by the ECE/FAO secretariat in Geneva on the basis of data supplied by national correspondents and with the help of a core team and a number of consultants made available by their governments as a contribution to the study.
The geographical scope of the study is Europe, including the market economies of Western Europe, the transition economies of Central and Eastern Europe and the Baltic countries, but not Belarus, the Russian Federation or Ukraine. It covers the forest and forest products sector, including the forest itself, as well as production, trade and consumption of forest products and wood for energy, but not processed products such as furniture. It does not cover the outlook for non-wood goods and services, which will be the subject of another study.
Methodology
The study aims to be pragmatic, transparent and relevant and to use all available information to the fullest extent possible. Thus the methods used vary from sector to sector and country to country. They include:
· econometric projections for supply and demand of forest products in market economies, based on the analysis of long-term trends (1964-92);· national forecasts for forest area, growing stock, increment and removals; national forecasts for transition economies;
· secretariat estimates for waste paper recycling.
The separate forecasts are brought together in two internally consistent base scenarios, which are supplemented by several alternative scenarios. Scenarios are country-specific, with a projection period extending to 2020 and separate projections for the years 2000, 2010 and 2020.
Underlying assumptions. The scenarios are based on specific assumptions which must be kept in mind when evaluating the results. For the two base scenarios the most important assumptions are as follows:
· Western European GDP will grow by about 1.8 percent per year (base low) or 2.8 percent per year (base high) until 2005, and about 1.5 percent per year thereafter (both scenarios);· the transition economies will recover 1990 income levels by 2000 and show steady, but not spectacular, economic growth thereafter;
· residential investment is expected to expand only slowly and probably considerably slower than the economy as a whole;
· in general, costs and prices in real terms for roundwood and forest products will remain constant over the long term, as they have in the past;
· there will be no fundamental changes for forest policy in Europe, which includes a continuation of the trend to increase emphasis on non-wood management objectives;
· policies on environmental protection, biological diversity, waste management and sustainable development will be further strengthened;
· there will be no major disruption of energy supply nor a substantial rise in general energy prices;
· there will be a continuing free trade regime;
· there will be further cutbacks in public spending, despite the maintenance of social and environmental objectives.
Base scenarios
The two base scenarios are differentiated only by the assumptions regarding the rate of economic growth.
Consumption of sawnwood and panels is expected to grow at rates between 0.8 and 1.8 percent per year between 1990 and 2020, which is rather slower than the economy as a whole, while paper consumption is expected to grow at 2.1 to 2.6 percent a year.
European production is expected to grow slightly slower than consumption for paper, but at the same rate as consumption for sawnwood and panels.
Even though no significant energy price rise is expected, the consumption of wood for energy will continue to grow slowly. Even now, if all types of wood energy are taken into account, 45 percent of the wood removed in Europe is used for energy (often after another use or as a by-product of it). This share is expected to increase.
The waste paper recovery rate is also expected to rise, from 37 percent in 1990 to more than 48 percent in 2020. The volume recovered would double in the base low scenario and triple in the base high scenario.
Removals, or the harvest from European forests, are expected to rise slowly, from about 390 million m3 in 1990 to about 480 million to 490 million m3 in 2020, which is still only about 70 percent of the net annual increment. The forest area is expected to show a minimal expansion (an increase of 3 percent or 5 million ha over 30 years). As a consequence, levels of growing stock per hectare would increase, to unheard of levels in some Central European countries with conservative silvicultural traditions. The realistic maximum level of removals in 2020, without depleting the forest resource (or investing in raising forest productivity) is estimated to be 530 million m3: the increase over the base scenarios would be essentially in the three export-oriented European countries, Austria, Finland and Sweden.
Europe's net imports of forest products (excluding wood in the rough) from other regions are expected to increase, particularly as regards paper. In the base low scenario, this increase is about 55 million m3 EQ (equivalent wood in the rough) and, in the base high, about 80 million m3 EQ. In the author's view, the rest of the world has the potential to supply these volumes, as economic growth in developing countries may not generate per caput consumption levels of forest products as high as those in Europe and North America. Also, new supply sources, notably fast-growing plantations, will react rather rapidly to increased demand, signalled by increased prices.
Net imports of wood in the rough are projected to increase by about 25 million m3, but this is a residual figure, and the volume could come from extra-European supply or from non-European sources, depending on delivered wood cost,
The share of European removals in European wood and fibre supply is expected to fall from 69 percent in 1990 to 52 to 56 percent in 2020, and that of waste paper to rise from 13 percent to 21 to 22 percent. The share of net imports will rise (from 10 percent to 15 to 17 percent) and that of industrial wood residues stay constant at around 9 percent.
In general, prices are not expected to rise significantly over the long term because of competition from substitute materials, the supply-driven nature of the waste paper market and the potential to expand Europe's removals without threatening sustainable forest management. These factors would outweigh possible price tensions arising from economic growth in other regions and supply cutbacks from natural forests.
The adverse effects on forest biomass of changes in the environment (e.g. pollution) have been limited: increment and growing stock have developed favourably in all major regions of Europe. The favourable trends on forest increment and growing stock are likely to continue for at least 20 years. However, the adverse effects of pollutants on forest biological diversity have been widespread,
The European forest accumulates carbon and thus makes a significant positive contribution to the global carbon balance. This is expected to continue over the time horizon of ETTS V.
Alternative scenarios
A number of alternative scenarios - some quantitative, some qualitative explored the sensitivity of the base scenarios to different assumption and the possible consequences of different policy choices. The quantitative alternative scenarios examined the sensitivity of the base scenarios to changes in the assumptions regarding: prices of forest products, prices of wood raw material, waste paper recovery rates, levels of construction activity and global supply constraints.
Qualitative scenarios explore the consequences of higher energy prices and of environmental policies and legislation further than in the base scenarios (Deep Green Future).
This analysis shows that: the developments of costs and prices for roundwood and forest products are more important for the future of the sector than commonly stated in the policy discussion; the sector has a number of self-regulating mechanisms, including price effects on demand and supply as well as waste paper recovery, which prevent it from entering a destructive cycle of extreme trends and reactions. Some pans of the system are more stable than others; in particular, demand for European roundwood is much less volatile than demand for imports from other regions.
Conclusions
The study shows that, given continuing economic growth and competitiveness in price and performance of forest products, European consumption and production of forest products will continue to grow steadily. Waste paper recycling will intensify and net imports grow. Nevertheless, the demand for European roundwood will increase. Europe's forests will, however, be able to meet this challenge by increasing harvest levels while remaining within the limits of sustainable wood supply.
Copies of the complete study may be obtained from the UN/ECE, Geneva, Switzerland, or through official UN distributors and booksellers worldwide.
