Biotechnology in forestry: Technological and economic perspectives

Abstract

This paper provides an assessment of the state of the art and future prospects of biotechnology application in forestry. In particular it examines the influence of (1) derived demand for research and development (R&D), (2) the nature of R&D suppliers and their motives, and (3) the regulatory system on rates of innovation of biotechnology in forestry. The paper identifies areas of “market failure” caused by policy-related uncertainty, tenuous land ownership structure, long intergenerational horizons and the public nature of many of the goods and services produced by the forest. Improvements in tenure and stumpage systems to increase the certainty of property rights, provision of compensation for public-goods production and increases in the level of funding for R&D are required. In the short run, funding of technology transfers to forestry from other fields of biotechnology applications are likely to provide the highest marginal returns on investment. The paper concludes that biotechnology in forestry applications holds a significant promise in the long run. It offers the possibility of improved forest conservation as well as increased quantity and quality of timber harvested, allowing for the customization of fiber production. Customization of fiber production may result in downstream product differentiation and cost reductions.