Forest Products and Services

Although Europe covers 5 % of global forest area, its contribution to global production and net-trade in forest products is in the range of 25-30 %. In some products, such as softwood market pulp, Europe provides about 50 % of global output. Fragmented industry structure is typical for all main products, for example, the number of paper companies in Europe is about 800. Globally, three Nordic companies (Stora Enso, UPM, SCA) are in the top 10 producers of pulp and paper products.

Because of growing societal demands and customer orientation, it is essential to capitalize on renewable, sustainable and carbon neutral raw material base of European forest sector. Maturing forest product markets in Europe will also place pressure on the competitiveness of the forest sector and on structural renewal through the generation of increased value added and new innovative products and business models. One of the major trends is the development of forest-based bioenergy and biofuels, which can make the European forest sector more diversified and competitive.

Forests fulfill numerous functions which are not reflected in the prices of marketed wood and non-wood goods and services. Non-market services provided by forests include e.g. protecting biodiversity and landscape, contributing to climate change mitigation, regulating hydrological flows and control of water quality, and maintaining and representing cultural heritage. Non-marketed forest products and provision of various ecosystem services, including ecotourism, potentially play an increasingly important role in European rural economies in creating employment possibilities and their relative importance is increasing due to the growing urbanization and changing societal values. The direct use values of non-marketed forest products and ecosystem services are often competing and sometimes exceed timber values in European Union countries.

EFI Activities on Forest Products and Services

EFI Research Programme ‘Markets and Socio-Economics’ is active in the area of developing a global forest sector market and trade model EFI-GTM jointly with the University of Life Sciences, Norway, and Finnish Forest Research Institute, Finland. The model is currently being used in several EU-level projects analyzing impacts of various policy changes on international forest products markets.

Other current topics include studying competitiveness and sources of competitive advantage of forest industry enterprises, both for large multinational companies and small and medium sized companies in the European woodworking industry. Examples of current projects are:

Towards Progressive Forest Sector in Northwest Russia

The forest resources of the European part of Russia are vast (approx. half of the European forests), and form a major part of the total timber trade in Europe. The abovementioned ongoing project (2004-2007) used EFISCEN scenario modelling approach in analyzing possible long-term development of forest resources and wood supply in Northwest Russia. A sub-study of this project also analysed roundwood export scenarios and forest industry development in Russia until 2020 by using the EFI-GTM model.

Publication in Metla Working Paper Series is forthcoming. Metla's project page.

Estimating Economic and Technical Availability of Wood for Energy Production in Northwest Russia

This ongoing study (2007-2008) financed by PONSSE foundation estimates economic and technical availability of wood for energy production. In order to find possibilities for technology transfer, Finnish energy wood supply technologies and machinery are compared to Russian equivalents. Business environment of the region and attitude of design makers to bioenergy are studied to show main challenges and opportunities for the wood fuel production.

Literature:

EFI Policy Brief 1. Europe.
European Forest Sector Outlook Study. 2005. Main Report. ECE/TIM/SP/20. 234 p.
Forest based-sector technology platform. Promoting innovative and sustainable use of forests.
Forest products annual market review 2006-2007. UNECE FAO.