Regional socio-economic impacts of intensive forest management, a CGE approach

The demand for and supply of forest biomass have both been increasing in recent years, which will set new requirements for forest management. Thus, new studies on regionally suitable forest management regimes to fulfill the needs of potential new investments and the impacts on wood supply potential on regional socio-economic welfare are called for. The aim of this study was to examine the impacts of intensive forest management due to increased demand for wood biomass, from the regional economy point of view. In particular, the impact of intensive forest management on 1) regional gross domestic product (GDP), 2) private consumption, and 3) employment were assessed. The study was carried out by using computable general equilibrium (CGE) modelling combined with the requisite statistics and simulation of regional forest potential in the future. The results showed that total regional forest biomass supply with more intensive forest management could be increased annually on average by 26% (1.7 Mm3) by 2030 compared to the business as usual (BAU) scenario. In this study, regional demand was increased by a hypothetical saw mill (0.5 Mm3) and biorefinery (0.7 Mm3). Total regional socio-economic benefits could be 2.8% (€150 M) for GDP, 1.5% (€49 M) for private consumption and 1.6% (780 person-years) for employment, larger by 2030 than in the BAU scenario including multiplier effects. The study demonstrated how much regional socio-economic welfare would increase if regional wood demand with new investments combined with more intensive forest management and wood supply had more attention paid to it.