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A research programme focused on how to assess
benefits and costs in the area of environmental
decision-making. Aims at developing theory and
methods for applying cost-benefit analysis (CBA)
to problems involving environmental policies and
management. Financed by the Swedish EPA. Thematic
areas Distributional issues Risk,
uncertainty and resource dynamics Valuation
and benefit transfer Goal conflicts
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Goal conflicts and side gains Connections and
interactions between policy measures and
environmental objectives

• Actions taken to achieve a specific social
  objective generally have effects on other social
  objectives positive or negative
• How does the target level for one environmental
  goal affect the cost and possibilities to reach
  another environmental goal?

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Damned if you do, Damned if you don't Reduced
Climate Impact vs. Sustainable Forests in Sweden
Erik Geijer, Göran Bostedt Runar
Brännlund Resource Energy Economics, Vol. 33
(2011)
Purpose

• The purpose is to analyze the goal conflict
  between the environmental objectives Sustainable
  Forests and Reduced Climate Impact.
• by
• Assessing possible effects of a implementation of
  the objective sustainable Forests on the supplied
  quantity of biofuels within the forest sector,
  and thereby the effect on the goal concerning
  emissions of greenhouse gases.

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Reduced Climate Impact

• Average emissions of greenhouse gases for the
  period 200812 should be at least 4 lower than
  in 1990 (calculated as carbon dioxide
  equivalents)
• No allowance is to be made for uptake by carbon
  sinks or for flexible mechanisms.
• Implemented e.g. carbon taxes, quota systems for
  the electricity market and trough trading with
  emission credits.
• The part of the energy sector that can substitute
  away from non-renewable fuels have, or will, do so

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Demand wood fuel
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Wood fuel in the heating sector TWh
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Sustainable Forest

• (Interim targets)
• Long-term protection of forest land
• A further 900,000 hectares of forest land of high
  conservation value will be excluded from forest
  production by the year 2010.
• Enhanced biological diversity
• Increasing the quantity of hard dead wood by at
  least 40 throughout the country and considerably
  more in areas where biological diversity is
  particularly at risk

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Forest land area (1000 ha)
Total Forest land 22 906 (27
997) Protected forest 751
(4443) 3.3 (15.3
) Sustainable forest A further 900 000 ha or 4
of the total forest land.
, According to international definitions
FAO (Food and Agriculture Organization)
MCFFE (Ministerial Conference on the
protection of forests in Europe)
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Two opposing forces ?
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(No Transcript)
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• Forest owners are assumed to choose the
  quantities of different assortments that maximize
  profits at given prices. This is made conditional
  on the forest assets and cutting costs. The
  remaining actors in the model use raw materials
  from the forest as an input in their production
  process the pulp industry, the saw mill industry
  and the heating industry.
• We assume that pulp mills use labor, energy and
  capital to convert pulpwood into pulp, and that
  the saw mills and heating plants use the same
  types of production factors to convert sawtimber
  into sawn goods and wood fuels into heating.
• Finally we allow for technological development
  (by including a linear technological progress
  term (t)) and for lags in the adjustment to price
  change (by a partial adjustment term (xi(t-1))) .
  This means that if a price changes, demand does
  not necessarily adjust completely within one
  period. This also means that we can estimate both
  short run (within one year) and intermediate run
  effects.

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Data

• Annual time series data covering the period
  1966-2006
• Unsurprisingly - this relatively long period of
  time contain some changes with respect to e.g.
• which agency that produces certain statistics.
• what they measure.
• how they measure it.
• there are occasions where two subseries
  have had to be fitted against each other with
  help of a scalar.
• Estimation through 3SLS.

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Estimation results Price sensitivity
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Simulation results
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Conclusions

• Protection of forests will decrease the
  supply/demand of forest fuel.
• The decrease in supply of wood fuel will decrease
  output from district heating plants by 2 TWh. If
  oil is used as substitute Swedish CO2 emissions
  will increase rather than decrease, as the goal
  Reduced Climate Impact prescribes.
• A cost-benefit analysis of one environmental goal
  will be contingent on target levels for other
  environmental goals.

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Biofuels or Biodiversity An Analysis of the Goal
Conflict between Reduced Climate Impact and
Biological Diversity
Erik Geijer, Göran Bostedt, Joakim Hjältén,
Runar Brännlund Jon Andersson Manuscript in
prep.
Purpose

• The purpose is to analyze the goal conflict
  between the environmental objectives Reduced
  Climate Impact and A Rich Diversity of Plant and
  Animal Life.
• by
• Assessing possible effects of a implementation of
  the objective Reduced Climate Impact through
  increased implementation of stump harvesting in
  northern Sweden, and the consequent effects on
  biodiversity.

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Reduced Climate Impact

• Average emissions of greenhouse gases for the
  period 200812 should be at least 4 lower than
  in 1990 (with current policies, the expected
  outcome is about 15 below 1990)
• By 2020 emissions of greenhouse gases in Sweden,
  from activities not included in the EU Emissions
  Trading Scheme, will be reduced by 40 compared
  with 1990. (with current policies, the expected
  outcome in 2020 is about 25 below 1990)

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A Rich Diversity of Plant and Animal Life

• (Interim targets)
• The loss of biodiversity in Sweden should be
  halted by 2010
• Enhanced biological diversity
• Given the importance of CWD (Coarse Woody Debris)
  for forest biodiversity another sub-goal is to
  increase dead wood volume.

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Stump harvesting as a way of increasing the
supply of wood fuel.

• The main inspiration for stump harvesting in
  Sweden comes from Finland.
• Deemed as very interesting by Swedish forest
  companies such as SCA and StoraEnso.

• Currently (2010), stump harvesting is conducted
  by StoraEnso in the counties of
  Västergötland, Östergötland, Småland and
  Halland.

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The Model

• Two parts
• A model describing the interlinkages between the
  different
  parts of the forest sector,
• A second model describing the relation between
  stump harvesting and
  biodiversity via the changes in dead wood.
• The region is logging area one an
  administrative district roughly
  corresponding to the four northernmost counties
  in Sweden. The motive for choosing this area is
  that the ecological data is mainly relevant for
  this area.
• Again, the parameters for the forest sector model
  are estimated with 3SLS.

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The Model (cont.)

• The ecological model originates from an
  experiment conducted at ten localities situated
  in the counties of Västerbotten and
  Västernorrland - basically the same region of
  Sweden.
• The data allows for predictions of the effects
  from stump harvesting on population densities of
  saproxylic beetles - used as proxy for
  biodiversity.
• The ecological analysis showed that stump
  harvesting will reduce the population density of
  saproxylic beetles per ha in a an approximately
  one to one relationship, i.e. if 80 percent of
  the stumps are harvested about 80 percent of the
  population remaining on the clear-cut is gone.

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Simulations

• In the simulations we will assume that the demand
  for biofuels, originating from heating plants
  within cutting area one, will increase by 3 TWh
  (equivalent to approximately 1.6 million m3
  wood).
• Furthermore, we assume that about 20 percent (350
  000 m3fub) of this increase will consist of
  demand of primary forest fuel.
• In the simulations, this will translate to a 30
  percent exogenous increase in the demand for
  primary forest fuel at every price level.

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Results

• Our calculations for this sparsely populated
  region in Sweden give at hand that about 3.4 of
  the clear-cut area need to be subjected to stump
  harvest every year to provide the required volume
  of forest fuel.
• This means that future stump harvesting projects,
  with the aim to fulfill the objective Reduced
  Climate Impact, might overturn the objective A
  Rich Diversity of Plant and Animal Life due to
  the dramatic reduction in dead wood volume on
  clear-cuts.
• No nonmarket value of lost biodiversity has been
  estimated in this paper, but it is clear that a
  cost-benefit analysis of an increased use of
  biofuels through stump harvesting that does not
  take the goal conflict with respect to
  biodiversity into account, would seriously
  underestimate the costs of such a solution to the
  increased demand for carbon-neutral energy.

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Thank you for your attention!