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

Abstract: The aim of the report is to illustrate the possible socio-economic consequences of two specific regulations on how forestry may be conducted in Sweden, compared to the current way of conducting forestry. The background and motivation for the analysis is the proposal for a new forestry strategy put forward by the European Commission and the proposal for an amendment to the LULUCF (Land Use, Land Use Change and Forestry) regulation. The new Forestry Strategy is intended by the European Commission to contribute to the achievement of the EU biodiversity target and the objective of reducing greenhouse gas emissions by at least 55% by 2030 and achieving climate neutrality by 2050. The proposal for a revised LULUCF regulation aims to strengthen the contribution of the LULUCF sector to the EU's increased climate ambition by introducing binding requirements for increased sequestration at Member State level for the period 2026-2030. The proposal for a new forest strategy would radically change the way forestry is conducted in Sweden. The direct cost, calculated as lost timber values in terms of root net (income from timber sales minus harvesting costs), is estimated at between 4 and 16 billion annually with a present value for the next 100 years of between 110 and more than 300 billion SEK. If the loss of raw materials for the Swedish forest industry cannot be replaced by imports at the same cost, there will be a loss in the form of reduced consumer surplus. Given different assumptions, this implies an additional cost of between SEK 6 and 30 billion annually. Over the next 100 years, this means a present value of between just under EUR 200 and 1 000 billion. The climate benefit, measured as net carbon dioxide removals, is positive in the short and medium term (first 30 years) and then becomes negative, conditional on material and energy substitution having an impact on net removals. Overall, this means that the difference in present value between the alternative scenarios and the reference scenario is negative. Assuming that material and energy substitution has no effect on net removals, the alternative scenarios contribute to a positive climate benefit, but the present value of the climate benefit cannot outweigh the costs.

Keywords: Skogsskötsel; Koldioxidbindning; Samhällsekonomisk analys

JEL-codes: D61; Q23

Language: Swedish

27 pages, December 5, 2022

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