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European Commission

[Check Against Delivery]

Janez Potočnik

European Commissioner for Environment

The role of forests in tomorrow's world

Economist Group's second annual World Forests Summit

Stockholm, 20 March 2014

Ladies and gentlemen,

The theme of this year's summit is "Unlocking the true potential of forests". We have been asked to reflect on how this can be done while managing forests profitably and sustainably in the future.”

There are at least two underlying assumptions in that question:

  • the first assumption is that the "true potential of forests" is currently not fully exploited,

  • and the second is that forests can be managed profitably and sustainably at the same time.

I would like to challenge both assumptions. And I say 'challenge' -- not 'dismiss' -- because while I don't think they are necessarily wrong, but I do think there are important nuances which allow for different answers, depending on one's perspective.

The answer to the first question depends on how you see the value of forests, and how you define “true potential”.

If you're an unscrupulous entrepreneur with very short-term interests, a forests' true potential is only fully exploited when all the trees are cut down and you've pocketed the profits. If you're a nature lover, the forests' true potential is best fulfilled when it remains as intact wilderness, with as little human intervention as possible. For most forests, the reality lies somewhere in between, and whether their full potential will be achieved in the future depends a lot on whether and how well we manage to reconcile the different interests affecting them today.

The story is similar for the second question. The answer will almost certainly differ depending on how you measure sustainability, and how much you value the broader benefits provided by forests. Most foresters know that the long-term profitability of their activity requires that the resource they depend on is managed sustainably. But are profitability and sustainability compatible in the face of the many demands on forests – and not only for timber?

We know that forests play many different roles. Economically, they are a source of valuable wood and other products. Environmentally, they store carbon and protect soils from erosion.

They regulate the local, regional and global climate, and purify air and freshwater. They are important biodiversity repositories and contain the greatest variety of species found in any terrestrial ecosystem.

And finally, they offer broad societal benefits, including for human health, recreation and tourism. For example, a case study from Denmark found that the recreational services provided by forests can reach over €14,000 per hectare per year.

But I've seen first-hand how quickly these benefits can be wiped out. I come from Slovenia – a small country but a big forest nation – 3rd in the EU in terms of share of forests, after Sweden and Finland. This winter, Slovenia experienced a devastating ice storm. As a consequence 40% of forests in Slovenia were damaged with an estimated cost of 194 million euros (and this is only a first estimate). The damage is irreversible.

The truth is that if forests are to continue playing their part to the best of their ability, each of their different roles need to be fully recognised and valued. But the fact is that they face competing and often conflicting demands which are not likely to diminish in tomorrow’s world, when millions more people will be sharing the planet and its limited resources.

Already today in many parts of the globe, we see that the land on which a forest grows is considered at least as valuable, if not more so, than the forest itself.

Globally, much forest use is not sustainable, as it tends to deplete the resource it depends on. About 45% of the Earth's original forest cover has now disappeared. Most of it was cleared during the 20th century. With forests currently covering around 30% of the world’s land area, loss of natural forests has continued at a rate of about 13 million hectares per year since 1990. This is an area equivalent to the size of Greece. And there are no signs that this trend is set to change in the near future.

Europe, the continent I know best, is something of an exception to this rule. Although we lost vast forested areas before and well into the Industrial Revolution, the situation turned around in the 19th and 20th centuries, and the forest area expanded significantly. Today, forests and other wooded land cover over 40% of the EU’s land area, and nearly a quarter of the EU’s forest area is part of the EU’s Natura 2000 network of protected areas.

This all sounds very positive, but a closer look at the situation shows a more complicated picture.

The fact is that forest habitats in Europe are changing. They are more fragmented and are being managed more intensely than ever. Since the mid-1990s, reports by the European Environment Agency have noted a trend towards more uniform forest structures in the EU, with a reduced variety of tree species. This means a loss of forest biodiversity, as well as less resilience to pests and disease, but also to a changing climate. The introduction of exotic tree species and animal species for hunting purposes have further complicated the situation.

As a result, only a very small proportion of the natural forest that once covered most of Europe remains untouched, and where it still exists, it is mostly found in isolated pockets. We continue to lose old natural and semi-natural woodlands.

This trend towards ever more uniform forests mirrors changes in the agricultural sector over the past decades. Intensification and homogenisation of production and the consolidation of management units is leading to loss of spatial and structural diversity.

In Western Europe, less than one-third of total forest area is semi-natural, and there are nearly no truly natural old forests left. Some new forest habitat types are being created -- for example short rotation plantations -- but these generally have low biodiversity.

So, what does this mean? It means that the forests picture in Europe is still far from being 'perfect'. We have more forests, but of limited potential when seen from the perspective of sustainable development. I believe that the issue of valuation, which I mentioned earlier, is both the problem and the potential solution to this challenge. And I also believe that in Europe we are starting to see the forest from the trees.

Let me explain why.

In Europe, recognition of the broader economic benefits provided by biodiversity and ecosystems, including natural forests, is slowly moving from theory to practice. In 2007, the European Commission, together with Germany, launched a major study on the Economics of Ecosystems and Biodiversity, which highlighted the cost to society of continuing biodiversity loss and ecosystem degradation. One of the key recommendations from the study is to systematically assess and account for the full value of ecosystems and biodiversity and reflect these values in policy action and decision-making.

While we aren't quite there yet, we are making good headway.

The EU is currently undertaking a major exercise to map and assess the state of ecosystems and their services in Europe. This knowledge will allow us to reflect the values into accounting and reporting systems at EU and national level by 2020 – which is a target we committed to under the Convention on Biological Diversity.

The European Environment Agency has already produced a first map of ecosystem conditions in Europe, which will serve as a baseline for measuring progress towards reaching related objectives, such as restoring at least 15% of degraded ecosystems, developing and expanding Green Infrastructure coverage, and ensuring no net loss of biodiversity in the EU by 2020.

Forests, as key ecosystems, are at the heart of this exercise and the country hosting us today, Sweden, together with Portugal, is leading the work on mapping and assessment of forest ecosystems in Europe.

Some preliminary case-studies already show how cost-effective green infrastructure solutions provided by healthy forests can be.

For example, flood control would be achieved better and cheaper if resources were put into expanding the existing forest cover in the upper river basin areas in the Czech Republic, rather than into costly heavy engineering work in Germany.

In addition to this work on mapping and assessment, we also launched a pilot exercise on Natural Capital Accounting last year, with the involvement of EU Member States. The results will be used to develop methodological guidance for Member States.

So there are grounds for optimism, but we need to make sure that this progress isn't overtaken or obscured by other developments.

Developments on the climate and energy policy front, for instance. The EU is committed to finding secure energy sources to replace fossil fuels, increase its energy security and reduce greenhouse gas emissions. This has considerably increased demand for biomass as an energy carrier. At the same time, other uses of biomass have remained stable while other demands on forests have even increased.

According to data provided by EU Member States, by 2020, biomass for heating, cooling and electricity would supply about 40% of the renewable energy target. This is roughly equivalent to the present-day total EU timber harvest!

The new EU framework on climate and energy for 2030, proposed by the European Commission in January, foresees a further increase in the share of renewables in the energy mix, to at least 27%. Whether this will mean additional demand for biomass depends on how the package will be implemented at EU and national level, and how the interactions between bioenergy and land use are taken into account in the greenhouse gas commitment.

On top of this demand for energy, new demand is expected to rapidly develop from the promising sector of a growing bio-economy, in which biomass replaces non-renewable fuels and raw materials. This will bring us to the beginning of a new phase in which the role of forests as a material source will play an ever more central role.

But it's an area where we need to tread carefully.

Forest-based industries and scientific institutes have pointed out that the combined demands for conventional products, energy and new biomaterials could only be met with a very significant increase in domestic output and imports. Yet forests are a limited resource, and biomass supply cannot be increased infinitely without the risk of undermining the provision of other goods and services, not least since currently around 60-70% of the forest increment is already utilised in the EU. We need to make sure that the limited supply is used in the most efficient way possible, contributing most to society. It is therefore vital that these competing policy demands pay due attention to the full impacts and implications for forests and forestry.

These considerations are precisely at the heart of the new EU Forest Strategy, which the European Commission proposed last autumn in response to the new challenges facing forests and the forest sector. The strategy advocates sustainable forest management "in which forests and forest land are used in a way, and at a rate, that maintains their biodiversity, productivity, regeneration capacity, vitality and their potential to fulfil, now and in the future, relevant ecological, economic and social function at all levels, and that does not cause damage to other ecosystems."

This is a tall order, certainly; but it's one that we need to deliver on if forests' many benefits are to be delivered in a balanced way in the future.

***

Ladies and gentlemen,

However precious our own forests are to us in the EU, we can't ignore the fact that they represent no more than 5% of global forest cover.

We are keenly aware of the importance of forests elsewhere in the world. The EU is committed to halting global forest cover loss by 2030 at the latest and reducing tropical deforestation by at least 50% by 2020 compared to 2008 levels. Commitments which were re-confirmed most recently in the new EU Environmental Action Programme.

We are also looking at the impact our consumption has on forest loss on a global scale, since the EU imports significant and increasing amounts of forest products and other products which require a lot of land to produce – some of which comes at the expense of forests. So we know that the choices we make have an impact on global forests.

One way we are working to reduce this impact is by improving resource efficiency at home, and stimulating a shift from a linear economic model, where we extract, produce, use and throw away, to a circular economy model, where waste from one stream becomes the raw materials for another. A good example of this is when wood by-products are used to make paper, which is recycled back into pulp board, which is itself then turned back into paper, and the ash residue is used to produce other goods, like bricks or fertiliser.

The EU is also helping other countries and regions to manage their forests wisely and tackle the drivers of deforestation. We've put in place a framework for forest law enforcement, governance and trade and are concluding voluntary partnership agreements with third countries aimed at halting the trade in illegally harvested timber, which put in place licencing schemes to verify the legality of timber exported to the EU. And last year, the EU Timber Regulation entered into force. The Regulation prohibits the placing on the EU market of illegally harvested timber and derived products; it requires EU traders to exercise 'due diligence'; and it requires economic operators to keep records of their suppliers and customers to facilitate the traceability of timber products.

Let me finish where I started by turning back now to the opening questions. I believe that with the right policies and practices, we can "unlock the true potential of forests" in the full sense of unlocking their economic potential, while also ensuring their ability to deliver the goods and services we need, now and in the future. And that means fully recognising the full set of values that forests have to offer.

This is and will continue to be challenging, for Europe and for the rest of the world. It's our common challenge, and it's one that we can only meet together.

Thank you for your attention.


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