CERE Working Papers,
CERE - the Center for Environmental and Resource Economics

Abstract: Woody biomass is the largest source of renewable energy in Europe and the expected increase in demand for wood was the stimulus for writing this paper. We discuss the economic effects of biophysical capacity limits in forest yield from a partial equilibrium perspective. Opportunities to increase the supply of forest biomass in the short- and long-term are discussed, as well as environmental side effects of intensive forest management. Focusing on northern Europe, national estimates of potential annual fellings and the corresponding potential amounts, simulated by the European Forest Information Scenario model (the EFISCEN model) are then resented, as well as reported fellings. For the region as a whole, there seems to be substantial unused biophysical potential, although recent data from some countries indicate underestimated annual felling rates. There is a need to discuss strategies to ensure that demand for wood resources in northern Europe can be accommodated without large price increases. However, using a larger proportion of the biophysical potential in northern Europe than at present will entail trade-offs with environmental and social values, which means that strategies are needed to protect and account for all the benefits of all forms of ecosystem services.

Keywords: Forest biomass; biophysical capacity; intensive forest management; European Forest Institute

JEL-codes: Q23

31 pages, March 31, 2015

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