Analysing economic impacts of conserving forest biodiversity in Southern Finland

Safeguarding forest biodiversity has been one of the most important issues internationally as well as in Finnish national forest and environmental policies since 1990's. In the next coming years, decisions will be made upon future actions for preserving forest biodiversity in Southern Finland. The ecological studies call for conserving 510% of the southern forest land. Setting aside forests for conservation is not, however, without problems. The previous research indicate that an increase in conservation increases timber prices and reduces wood harvests and therefore affects forestry and the forest industries. This study extends the previous work by presenting a tool for analysing the economic impacts of forest conservation so that two important issues are accounted for: (i) the overall impacts of conservation depend on the regional allocation of the conservation sites and (ii) biodiversity values differ accross regions. We present a multi-regional model of the Finnish forest sector, which combines detailed regional data on the forest industry, timber supply and the growing forest resources with the data on forest biodiversity. The biodiversity data are derived from three habitat quality models relevant to the Finnish case. The model is suitable for comparing the impacts of different conservation alternatives. In addition, the model can be applied to look for the optimal regional allocation of the conservation sites. Thereby, the question of how important is the regional allocation of conservation set-asides to the economic costs of conservation can be addressed. We demonstrate the model use by analysing the magnitude of conservation impacts for selected conservation scenarios.