Conference Agenda

Biodiversity and ecosystem services in European forests face continuous threats, despite past increases in forest cover and existing conservation efforts. Market-based incentives like payments for environmental services, aimed at private landowners who manage large parts of European forests, require rigorous impact evaluation to ensure effectiveness. We provide quasi-experimental evidence on the effectiveness of METSO, a large-scale public payments for forest biodiversity program in Finland. We combine a comprehensive dataset of enrolled parcels (n=56,221) across the Finnish mainland along with annual remote-sensing based outcome indicators from 2000-2024. We causally identify additionality on multiple outcome variables using spatial matching combined with staggered difference-in-difference regression, while accounting for spatial spillovers and geographic effect heterogeneity. Results show significant positive impacts of METSO, including avoided clear-cutting and improved stand structure (e.g., canopy extent, wood volume, old-growth features) compared to the counterfactual scenario. We discuss the potential of these structural forest outcome indicators as proxies for (currently not measurable) trends in species richness, emphasizing their role in measuring progress towards METSO’s goal of halting biodiversity loss.

The European Union’s Biodiversity Strategy sets an ambitious goal to increase the area of protected land and sea to 30% with 10% devoted to strict protection by 2030. The large land areas required to fulfil the conservation target and the quick schedule of implementation challenge both the current policy instruments and public funding for conservation. We introduce a deferrence mechanism for forest conservation by using procurement auctions. Deferring the conservation payments allows the government to conserve large areas in a quicker schedule, reduce the irreversible biodiversity loss due to harvesting risks and distribute the financial burden of conservation cost for a longer period of time. The deferred payments are paid an interest. The interest earning and an auction mechanism for downpayments strengthens the incentives for landowners to take part in conservation. We characterize the general properties of the mechanism and run numerical simulations to find that the deferrence mechanism facilitates a quick conservation of stands and thereby minimizes the loss of ecologically valuable sites caused by harvesting risks. The analysis suggests that keeping the lending period no longer than 10 years and paying a 3% interest rate provides a compromise that works rather well and outperforms the up-front mechanism in most cases.

Boreal forests provide a wide range of ecosystem services (ESs), including marketable outputs such as timber and bioenergy, as well as non-marketable outputs such as biodiversity and carbon sequestration. In this study, we propose a production model to define the forest production process, explicitly incorporating both desirable (good) and undesirable (bad) outputs. We employ a Directional Distance Function (DDF) to represent this production process and enhance the model by endogenizing the directional vector (F¨are et al., 2017), resulting in a modified version of DDF. To account for sample variation and correct for parameter deviation (Bostian and Herlihy, 2014), we further implement a bootstrap procedure. Utilizing the dual relationship between the revenue function and the DDF, we estimate the shadow prices of ecosystem services. We estimate the model with deterministic LP approach on a countyby- year panel from 2008 to 2014. We find that shadow prices vary across counties and over time but are generally low. Our results indicate that the shadow price of biodiversity is SEK 3, while that of carbon sequestration is SEK 50, suggesting that preserving one additional unit of biodiversity and carbon sequestration incurs a revenue loss of SEK 3 and SEK 50, respectively. We also show that abatement costs correspond to carbon emission is SEK 2000 per ton. We obtain the knowledge of ease of substitutability among various outputs by Morishima elasticity in order to determine a least-cost strategy of obtaining desired levels of environmental quality and informing decision makers whether or where policy incentives should prioritize. Given the relatively low shadow values of providing ESs and the long-term social benefits associated with ESs, we argue that a Payment for Ecosystem Services (PES) scheme is warranted to incentivize forest owners to provide these services.

European forests are increasingly expected to provide a wide range of biodiversity and ecosystem services (BES) beyond timber production, positioning non-industrial private forest owners (NIPF) as key contributors. A key issue is how to engage NIPF in this needed shift in forest management. To better understand the drivers of NIPF participation in voluntary agreements, we conducted a meta-regression analysis of 24 studies of survey-based stated or actual participation data, encompassing 28 distinct datasets and 571 observations from 12 European countries. The findings suggest that certain contract designs substantially enhance NIPF participation: short- and mid-term contracts of 1 to 30 years (as opposed to longer-term agreements), withdrawal clauses, non-restrictive management requirements, and higher compensation levels all promote uptake. Moreover, agreement objectives centred on biodiversity, carbon, or multifunctionality attract higher participation than timber- or water-focused aims. Although trust between the actors is often considered important in the literature, we did not consistently detect such effects on participation rates. The results indicate a more consistent NIPF interest in BES agreements after 2012, especially those centred on biodiversity and carbon aims as well as multifunctionality, potentially reflecting broader policy trends and motivation shifts among younger generations of NIPF away from timber production. These insights offer practical lessons for policymakers and practitioners aiming to design effective, targeted incentives that leverage Europe’s privately owned forests to meet biodiversity and climate objectives.