This study (Assessment of the economic environment of Natura 2000 forests) has been prepared within the LIFEinFORESTS – Improved communication, cooperation and capacity building for preserving biodiversity in Natura 2000 forests (B2 action, LIFE13 INF/HU/001163) – project in the framework of LIFE+ Information and Communication under the contract signed with the Duna-Ipoly National Park Directorate.
The main aim of the study is to summarize the international and Hungarian economic and environmental economic literature related to the Natura 2000 forests, and serve as a background study for the communication with and training of forest owners and users operating at Natura 2000 sites.
The concept of ecosystem services (ESs) is used as an overall framework for the study. In our opinion it is able to show all the benefits provided by forests and can also help to reveal that the benefits of nature-oriented, continuous cover forest management (CCF) can exceed the benefits of traditional rotation forest management (RFM). The definition and the classification of the Millennium Ecosystem Assessment (MA, 2003, 2005) is used throughout the study, so provisioning, cultural, regulating and supporting services are distinguished.
The first chapter gives an introduction to the theoretical and conceptual background of ESs, its economic valuation embedded in an integrative valuation framework, and the positive economic incentives related to ESs, like payments of ecosystem services (PES) and market creation of ecosystem services (MES).
In the second chapter economic valuation of ESs are discussed in details, especially related to provisioning, regulating and cultural services. Supporting services are left out in order to avoid double counting. Even though economic valuation of natural resources has been used in Hungary for decades, there is not so much experience with the economic valuation of ESs, especially in connection with forest ecosystems. Therefore, our literature review is mostly based on the international literature, but where available, Hungarian studies are cited as well. Methods are introduced for each category of ESs, and examples are shown for their application related to the most important forest ESs within each category.
The following table shows the most important forest ESs, the biophysical and socio-economic indicators and economic valuation methods used for their evaluation.
Table 6.1. Indicators and economic valuation methods for the evaluation of forest ESs
Ecosystem services Some indicators Economic valuation methods Provisioning services
wood (e.g. for industrial use, raw material for building and construction or furniture, firewood)
m3 /year market price
forest mushrooms ton/year market price
forest fruits and other non timber forest products (e.g. herbs, leaves for decoration)
ton/year market price
forest honey ton/year market price
game products (e.g. meat) ton/year market price
Cultural services
recreation, rehabilitation visitor day/year yearly income, travel cost, contingent valuation and ranking, choice experiment
landscape beauty yearly income, travel cost, contingent
valuation and ranking, choice experiment
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Ecosystem services Some indicators Economic valuation methods hunting (recreational and sport hunting) number of hunting
permits/year yearly income from hunting travel cost
environmental education number of
participating schoolchildren/year
yearly income
scientific research number of
studies/year costs of research projects
artistic inspiration number of
artwork/year contingent valuation and ranking, choice experiment
Regulating (including habitat) services
protection against soil erosion km2/year, cm/year replacement cost, cost of avoided damage
cost of mitigation
protection against win erosion km2/year replacement cost
avoided damage cost of mitigation water retention (water quantity regulation,
protection against flooding) m3/year, km2/year, replacement cost avoided damage cost of mitigation water purification (water quality
regulation m3/year, km2/year, avoided damage
cleaning the air (air pollution absorption) ton/year hedonic price method replacement cost avoided damage cost of mitigation climate regulation (carbon sequestration) ton/year market prices
avoided damage
protection against noise km2/year
number of affected inhabitants /year
replacement cost avoided damage protection against natural hazards (pest
control, protection against natural disasters, like ice breaking or wind-throw)
km2/year replacement cost
avoided damage
(biodiversity) number of species/
km2 number of individuals/ km2 biodiversity index
contingent valuation and ranking, choice experiment
Supporting services
soil formation mm/year usually not calculated due to double
counting
nutrient cycling ? usually not calculated due to double
counting
primer production ton/year usually not calculated due to double
counting
In the international scientific literature there are quite many examples for the economic valuation of some ESs (e.g. watershed services, carbon sequestration, recreation), while some services are not represented well (e.g. protection against noise or inspiration for art). Those ESs that are exchanged in the market can be evaluated much easier than those which have no market value. In the international literature there are quite many valuation studies on provisioning and cultural services, less on regulating
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services, and almost none on supporting services. The complexity if ecosystem functioning makes the valuation exercise more difficult, and the relationship between ESs and trade-offs between ESs need to be assessed before economic valuation are done.
In some cases attempts are made to evaluate a whole range of ESs of a certain forest site or forests of a country, but these valuation studies are usually not complete, suffer from some methodological problems or require data that are usually not available. There are only a few examples for valuation of ESs related to Hungarian forest ecosystems (e.g. recreation, some provisioning services, carbon sequestration).
Results of international studies can be used only from a methodological point of view, while the benefit transfers from international studies are usually result in too large statistical errors. International economic valuation studies on Natura 2000 sites are rare, while Hungarian studies are completely missing. Therefore, it would be advisable to further develop the local statistical data required for the valuation and conduct more preliminary studies in Hungary, the results of which can be used for future benefit transfers.
The third chapter contains the comparison of CCF and RFM from an economic point of view. The main part focuses on the profitability of wood production, while it is crucial for the forest owners and users at the Natura 2000 sites, who decide to convert their forest and switch to CCF. Based on the review of the international and Hungarian literature on this issue, we can conclude that in spite of the uncertainties and the difficulties to find comparable sites, there are some tendencies:
Revenues from the CCF reach and sometimes even exceed the revenues from the RFM.
Felling costs of the CCF can be slightly higher, while the regeneration and the tending costs are much lower than in the case of RFM, due to the use of natural processes.
The uneven-aged, multi-structured, mixed forest stands managed by CCF can avoid the ecologic and economic risks better than the RFM managed even-aged, less structured and mixed stands.
In sum, the economic outcome of the CCF is similar or even higher than of the RFM.
The advantage of the CCF is, that the income occurs evenly balanced in time, which can be an important aspect in case of small private forest holdings.
There is not so much experience regarding the profitability of the transition period, but based on the available data it can be supposed that profitability will be not much lower during the transition period either.
The main barrier of the expansion of CCF is the lack of special knowledge and experience. In addition the large game density has also negative impeding effects on natural processes.
Therefore, awareness raising, education and introduction of best practice cases to experts in forestry are crucial.
Interviews made with foresters following the rules of CCF show that CCF has no economic disadvantages for them, but more date is needed to make deeper economic calculations. Some conclusions from the interview:
benefits (amount and quality of harvested wood) is approximately equal wit RFM
costs are also similar but their distribution is different
the financial support system is preferable for CCFs
if we consider the three main functions of forests considered by foresters (economic, public welfare and protecting) the CCF provides a wider range of benefits for society than RFM
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According to our interviewees the principles of CCF could be much more widespread among private foresters. Some suggestions to assist this process were the following:
economic benefits of CCF should be better communicated toward foresters and the society,
trainings for foresters are needed with field trips to different landscapes and forestry conditions,
educational programs on CCF need to be developed (awareness raising at secondary school and university).
The two forestry approach can be compared according to the provision of ESs as well. Although there are currently not many international scientific studies focusing on this issue, on the basis of a quick qualitative expert assessment, we can say that the CCF probably provides more ESs than the RFM.
Nevertheless, it is important to stress that further research is needed in Hungary in order to have a more precise result.
In the fourth chapter economic incentives (PES, MES) related to forest ecosystems are discussed in the Hungarian context, and a short overview is also given about PES related to forest ecosystems in the European context. The following table summarizes the main incentives applied in Hungary.
Table 6.2. Economic incentives applied in Hungary fostering the conservation of forest ESs and the development of their markets
Economic incentives Hungarian examples related to forest ecosystems Payments for ecosystem services (PES)
Compensation for loss of income Natura 2000 compensatory payments for forests (EAFRD) Payments to foster nature friendly
forest management Forest-environment payments (EAFRD) Financial support for non
productive investments that improve the ecological status of forest ecosystems
Support for forest restructuring (EAFRD)
Support for actions to improve the resilience and environmental value of forest ecosystems (2014-2020) (EAFRD)
Support for the rehabilitation of forest ecosystems LIFE, LIFE+, Structural funds (EEOP (EEEOP: 2020), CHOP (CCHOP: 2014-2020)
Fostering the market creation of ecosystem services (MES)
Certification FSC and PEFC certification for timber and timber products stemming from sustainable forest management
National Park Product trademark for forest based products, certification schemes for (nature) forest schools
Financial support for processing forest products and for
infrastructure development assisting tourism and environmental education,
support for purchasing of equipment to process edible non timber forest products (EAFRD 2014-2020) (nature friendly forestry is not a requirement)
support for the development of (nature) forest schools (EEOP, CHOP 2007-2013),
support the development of public and touristic functions of forest ecosystems provided free to the public (EAFRD 2014-2020)
Abbreviations: EAFRD: European Agricultural Fund for Rural Development, EEOP: Environment and Energy Operational Programme, CHOP: Central Hungary Operational Programme, EEEOP: Environment and Energy Efficiency Operational Programme, CCHOP: Competitive Central Hungary Operational Programme, FSC: Forest Stewardship Council, PEFC:Programme for the Endorsement of Forest Certification
Payment schemes for ecosystem services (PES) support the improvement, rehabilitation of forest ecosystems and nature friendly forest management. Data available about the 2007-2013 EU budget period show that state forest companies applied for funding and were involved in many nature conservation related projects. Currently data is not available about the exact number of private forest holdings participating in Natura 2000 and forest-environment schemes. Most of the programs will
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continue in the 2014-2020 budget period as well, but there will be some modifications both in programs co-financed by the EAFRD and Structural funds.
Currently there are many incentives for market creation of sustainable forest products in Hungary. Only support for purchasing equipment to process edible non timber forest products does not contain sustainability criteria. It would be advisable to include.
Questionnaires among state forestry companies show that even though timber is still the most important product of state forestry but hunting, wild meat and cultural services (recreation and environmental education) are also important, the latter group is gaining more and more importance. Only a few forestry companies have FSC certification, the others do not even plan to acquire it. They thought that FSC and PEFC certifications do not foster continuous cover forestry. Most of the forestry companies operate a forest nature school and half of the schools have certification. They ranked both the importance and the success of these forest nature schools high. Currently only non processed wild meat is their important non timber forest product and only a few of them plan to develop other products (e.g. honey or wild berry products). Recreation and tourism are important services of most forestry companies, which are shown by the high number of investments in recent years mostly supported by EU funds. Ecological sustainability of non-timber forest products and tourism seems important for them, and many companies have introduced certain measures to meet these requirements.
We hope that our study can contribute to the current discussions about nature-oriented forestry both with the public and with other experts. In our opinion further inter- and transdisciplinary research projects are needed, where experts from natural and social sciences, practitioners and other stakeholders can cooperate and learn from each other.
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