Did you know what the carbon or harvest leakage effects are? And what role they play in climate change mitigation? If not, this post is just for you! In recently published article in Scandinavian Journal of Forest Research, scientists from Finland and Norway estimated the magnitude of the leakage of forest harvest changes in Norway on foreign regions. The results were astonishing! Check it out!

BACKGROUND

In recent years, global warming has been the subject of a great deal of political controversy. As scientific knowledge has grown, this debate is moving away from whether humans are causing warming and toward questions of how best to respond. The International Panel of Climate Change has forestry and use of forest biomass as important parts in its strategy for mitigating global climate change.

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On one hand, there are scientists who propose that it is favourable from the climate point of view to increase harvests from sustainably managed boreal and temperate forests, as wood biomass can be used for products that substitute other commodities whose production or use would cause more greenhouse gas (GHG) emissions. This shift in forest management to produce more sawlogs and increasing the production of long-lived harvested wood products (HWP) has been suggested to be particularly favourable. Thanks to this strategy it would accumulate the carbon stock in HWP and give room to plant new trees which would sequester additional carbon from the atmosphere.

On the other hand, several other studies have advocated to harvest less, in particular, if the harvested biomass was to be used as bioenergy. Such solution would keep a higher growing stock and, for at least some time, a higher carbon sequestration in the forests thus avoiding the long period to wait for that carbon released from combusted wood would be tied back to the growing forests.

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An important factor that should be accounted for when designing climate policies that affect forest management and utilization is the so-called leakage effect.

Carbon vs. Harvest leakage effect – what are they?

The carbon leakage concept related to forestry refers to the negative (or positive) consequences of forest carbon (C) sequestration in one area on C sequestration elsewhere. However, in this study a very similar concept of harvest leakage has been used, which is not the same as carbon leakage. With respect to the carbon leakage, factors such as carbon emission in transport and forest industry productions, substitution effects and differences in forest growth and thus carbon sequestration in different countries and for different species are very important and have to be included in the analytical framework.

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On the other hand, harvest leakage is defined as a phenomenon in which by restricting harvests or preserving forests in one region, we are causing increases in harvests somewhere else, what may not necessarily correspond to carbon leakage rates. When a country implements a policy that increases or decreases its supply of wood or harvested wood products, it may cause the other producer countries to decrease or increase their production. The problem setting of carbon or harvest leakage due to climate policies has been particularly relevant in the context of Reduced Emissions from Deforestation and Forest Degradation or tropical deforestation/reforestation. Recently, the leakage effect has become increasingly relevant also regarding policies affecting sustainably managed boreal and temperate forests in Europe where countries are considering the question of what kind of forest management and forest structures would best contribute to climate change mitigation.

RESULTS

The results of the study were remarkable. Researchers have found that about 60–100% of the harvest change in Norway is offset by an opposite change in the rest of the world. It was pointed that such leakage rates vary over time, wood category, background scenario, and the size of the harvest change. Asymmetries between the effects of increasing and decreasing the harvests also exist. For instance, in the beginning, an increase in Norwegian harvests causes more leakage than a decrease in harvests did. Interestingly, researchers found that there is declining leakage rate for increases in sawlog harvest in Norway.

Professor Birger Solberg from Norwegian University of Life Sciences, one of the authors of the study, explains this result in the following way:

“Initially, most of the increase in harvests in Norway is exported abroad, what affects the foreign roundwood markets directly making the harvests decline. However, later the sawlog supply increase in Norway and is entirely used for domestic sawnwood and plywood production. Such a change affects the roundwood markets in regions outside Norway only indirectly through increased competition in the industry side.”

It was found that 88–99% of the leakage due to the changes in Norwegian harvests is directed to the other European countries, particularly to Sweden but also e.g. to Finland. Nevertheless, over time, the leakage shifts increasingly to the regions further away from Europe and is weakened by the higher transport costs.

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The results suggest that a large part of any change in Norwegian harvests due to possible climate policies would be offset by an opposite change in the rest of the world.

Dr Maarit Kallio from Natural Resources Institute Finland, one of the authors of the emphasized:

 “Our study has shown that it is important to account for harvest leakage to avoid overestimating the climate benefits of policies that decrease or increase roundwood harvests. If harvest increases/decreases in one country, there is likely to be some opposite changes in the harvests, growing stocks and carbon sequestration in the forests of some other countries,  thus reducing the initially expected climate benefits. Policy makers should take these elements into account to make climate policies and carbon sequestration more effective.”

METHODS

Scientists used the EFI-GTM model that builds on a long tradition of projecting and analyzing the future developments in the forest sector using partial equilibrium modelling. It mimics the behaviour of profit or welfare maximizing consumers, producers, and traders in the competitive markets. The interaction of these price taking market participants makes the market equilibrium price set to a level where supply equals demand. The EFI-GTM integrates dynamics of forest resources, timber supply, forest industry, and forest product markets in 57 regions of which 33 represent individual European countries including Norway. In the version used in the study, there are 18 final forest industry products with specific regional demand functions. Some of these products are further divided into sub-categories in the industry side. To satisfy the demands in the energy sector, various biomass types for heat and power plants and biofuels are included. Intermediate commodities like chemical paper pulp are produced and traded, and side products, like sawmill chips and sawdust, are obtained from the production processes and traded between the industries and countries. Recycled paper is divided into four assortments, whose supply is limited by recycling rates applied to regional consumptions of various paper grades.

For more information about assumptions and data used in this study, please visit: Leakage of forest harvest changes in a small open economy: case Norway

Source: A. Maarit I. Kallio & Birger Solberg (2018): Leakage of forest harvest changes in a small open economy: case Norway. Scandinavian Journal of Forest Research, DOI: 10.1080/02827581.2018.1427787

Main photo credit: Rafal Chudy