Economic consequences of sustainable forest management regimes at non-industrial forest owner level in Norway

Abstract

Consequences for net present value, net income and harvest related to ‘sustainable forest management regimes’ at non-industrial forest owner level in Norway are discussed. The following indicators of a sustainable forest management have been analysed: existing old forest set aside for preservation, maintaining minimum target levels for area covered by old forest through time, restricted treatments for border zone areas around water bodies, retention of trees at final harvest and restricted options with respect to regeneration. The consequences were analysed according to individual as well as co-operative management for eight different properties. GAYA-JLP, a large scale forestry scenario model applying simulations and linear programming, was used for the calculations. A regime with a ‘medium’ intensity of the environmentally oriented constraints, and a real rate of discount of 2.5%, reduced the net present values by 8% to 20%. The results indicated that the consequences for individual properties might vary considerably if the regimes for a sustainable forestry are designed generally without considering the heterogeneity among the properties with respect to the initial forest state. Assuming co-operative management, the net present value of the entire forest area (all properties) increased. At the same time it was possible to increase, respectively, the proportion of old forest set aside for preservation and the area covered by old forest through time. The differences compared with individual management were relatively small for all these parameters, and most likely not large enough to cover up for the transaction costs related to co-operative management. Whether the gains of co-operation will exceed transaction costs, can probably only be answered through cost-benefit analyses of the actual project.