Consequences of the Swedish forest policy

Abstract

This article demonstrates that the opportunity cost (return forgone) of cutting principles imposed by the Swedish forest policy is economically significant. The Swedish Forestry Act of 1979 recommends a management strategy for sustaining high yields of valuable timber referred to here as the Balance Strategy. However, the Forestry Act allows for a range of different forest management strategies. The Act establishes both a minimum cutting volume for a ten‐year‐period and a maximum final cut area referred to here as the Minimum and Maximum Strategies, respectively. These strategies were compared to a management plan, referred to as the Economic Strategy, for minimizing the opportunity cost for the forest owner. Based on data from a recent forest management plan, a simulation model was used to predict yields and economic returns for a period of one hundred years. The results show that at a 4% interest rate the Economic Strategy produces a gain of approximately 8200 SEK ha^‐1. The Economic Strategy, however, emphasizes volume and its implementation results in a forest far different from that developed under the Balance Strategy, in which quality timber is also produced. The Economic Strategy may also have less favourable effects on biodiversity, conservation of the natural environment and the recreational value of the forest.

Key words:

• Policy analysis simulation mode!
• forest management strategies
• sustainable yield.