Policy coherence in climate change mitigation: An ecosystem service approach to forests as carbon sinks and bioenergy sources

Forest Policy and Economics 50 (2015) 153–162

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Forest Policy and Economics journal homepage: www.elsevier.com/locate/forpol

Policy coherence in climate change mitigation: An ecosystem service approach to forests as carbon sinks and bioenergy sources Marika Makkonen a,b,⁎, Suvi Huttunen a, Eeva Primmer a, Anna Repo a, Mikael Hildén a a b

Finnish Environment Institute, P.O. Box 140, 00251 Helsinki, Finland Finnish Forest Research Institute (Metla), P.O. Box 18, 01301 Vantaa, Finland

a r t i c l e

i n f o

Article history: Received 13 December 2013 Received in revised form 20 August 2014 Accepted 3 September 2014 Available online 23 September 2014 Keywords: Ecosystem services Climate change mitigation Forest Carbon sequestration Bioenergy Policy coherence

a b s t r a c t Policies governing forest ecosystems can mitigate climate change in many ways, making use of various ecosystem services. Although identification of ecosystem service trade-offs has received increasing analytical attention, the policies and mixes of policies generating the trade-offs have remained outside the focus. To advance the policy relevance of ecosystem service trade-off analysis, we analyse the coherence of Finnish policies affecting forest bioenergy and carbon sequestration, two contrasting means to use forests for climate change mitigation. In particular, we focus on the interactions that different policy outputs have with respect to these two ecosystem services. The analysed policy outputs represent different foci and levels and rely on different mechanisms. We identify the direct and indirect impacts that the policy outputs have on the supply and demand of the services by utilizing natural science and policy assessment approaches. We find forest bioenergy, representing a tangible ecosystem service exchanged in the market, to be governed more positively and with more explicit instruments compared to carbon sequestration. Carbon sequestration policies remain at a higher level of abstraction, stating merely strategic objectives, possibly because these markets are only emerging and remain political and highly uncertain. Our analysis shows that trade-offs between the two ecosystem services are generated by policies supporting bioenergy, whilst general policies advance both services. The entire mix of policy outputs and its differentiated impacts on ecosystem services should be thoroughly considered when assessing the strategies for mitigating climate change and designing new policy instruments. © 2014 Elsevier B.V. All rights reserved.

1. Introduction Ecosystem services have been suggested as an important way to frame complex socio-ecological problems and governance challenges (Carpenter et al., 2009). The ecosystem service approach stresses the functions of the ecosystems and the benefits people derive from them (Daily, 1997; MA, 2005). One of the main expectations placed on the ecosystem service concept is that it could support decision making and governance of the entire range of assets in nature, which humans use and depend on (Norgaard, 2008; Daily et al., 2009; TEEB, 2009; Potschin and Haines-Young, 2011). The social, economic, and ecological aspects of these assets would be weighed against each other when designing policies and evaluating their impacts. However, the degree to which ecosystem services have been addressed in policies varies, and policies address different services in different ways (Primmer and Furman, 2012; Hauck et al., 2013). A general postulate is that those services that have market value are duly recognised, whilst those services that are not exchanged in the market must be given a value to be weighed properly in decision-making (e.g., Fisher et al., 2009). ⁎ Corresponding author. Tel.: +358 2 9532 3337. E-mail address: marika.makkonen@metla.fi (M. Makkonen).

http://dx.doi.org/10.1016/j.forpol.2014.09.003 1389-9341/© 2014 Elsevier B.V. All rights reserved.

Policies can integrate these values to safeguard those ecosystem functions and services that remain outside the market. These assumptions have not been rigorously tested in real world policy settings, let alone in contexts where multiple policies interact. Greater understanding of how policies that already are in place influence ecosystem services is required for developing policies in a coherent way. Especially trade-offs in ecosystem service provision pose a challenge for governance because they create a need to make choices (Rodriguez et al., 2006). In general, increasing use of provisioning services, which often have market value, is prone to conflict with enhancing or safeguarding the less tangible supporting, regulating and cultural services (Tilman et al., 2002; Rodriguez et al., 2006; Martín-López et al., 2012; Hauck et al., 2013). However, trade-offs between ecosystem services are often unintentional and not generated by deliberate governing (Rodriguez et al., 2006; Hauck et al., 2013). Often, the demand to acknowledge the trade-offs at the policy level is triggered only after the policy generates unintentional negative consequences for some ecosystem services (Hauck et al., 2013). The apparent incoherence of policies is identified through these indirect impacts. Policy incoherence or coherence has been addressed in forest and environmental policy mainly outside the ecosystem service framework and its trade-off analyses (Howlett and Rayner, 2007; Mickwitz et al.,

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2009; Nilsson et al., 2012). Analyses of the interaction of multiple environmental policies have also addressed policy integration (Lenschow, 2002; Kivimaa and Mickwitz, 2006; Jordan and Lenschow, 2010) and policy interplay (Young, 2002; Urwin and Jordan, 2008). Policy coherence analysis, which deals directly with the compatibility of policies, is particularly suitable for analysing the entire chain, from policy objectives to impact (Nilsson et al., 2012). Policy coherence analysis is, moreover, used for analysing the ability of different policies to provide actors with coherent signals of desirable behaviour (Mickwitz et al., 2009). Therefore the policy coherence approach is suitable for analysing how policies contribute to the simultaneous maintenance of different ecosystem services. Climate change mitigation presents an important area to investigate policy coherence in relation to ecosystem services, and forest ecosystem services in particular. The use of wood for energy production and the management of forests for carbon sequestration both rely on the functions of forested ecosystems; however, potentially resulting in tradeoffs (Obersteiner et al., 2010; Mitchell et al., 2012; Vanhala et al., 2013). These ecosystem services contribute to climate change mitigation through different mechanisms and with very different consequences. Forest carbon sequestration absorbs CO2 from the atmosphere and stores it in the forest carbon pools, i.e. biomass and forest soil, whilst wood-based energy production can be used to substitute fossil energy and consequently reduce greenhouse gas (GHG) emissions. Whether woody biomass should be harvested and combusted in order to produce energy or, whether it should be left in the forest in order to increase carbon stocks in standing biomass and soil, poses a fundamental trade-off between these two services. However, the services can also be seen to be synergistic as the same forests are envisioned to provide both of these ecosystem services to mitigate climate change: “In the long term, a sustainable forest management strategy aimed at maintaining or increasing forest carbon stocks, whilst producing an annual sustained yield of timber, fiber, or energy from the forest, will generate the largest sustained mitigation benefit” (Nabuurs et al., 2007. p. 453). Thus, policies promoting these climate change mitigation strategies face the challenge of weighing trade-offs and searching for synergies. In this article, we present an interdisciplinary coherence analysis assessing the (likely) direct and indirect effects that the policy outputs have on demand and supply of forest bioenergy production and carbon sequestration. Most ecosystem studies do not combine analyses of supply (provision) and demand (use) although a chain from the ecosystem service provisioning to the service user can be traced in the ecosystem service approach (Ruhl et al., 2007; Potschin and Haines-Young, 2011). As mapping analyses have highlighted the need for producing knowledge of the production functions and the processes of societal use (van Jaarsveld et al., 2005; McDonald, 2009; Paetzold et al., 2010; Burkhard et al., 2012; Kroll et al., 2012), our study explicitly recognises the distinction of provision and use. We, moreover, seek to decrease the gap between governance and ecosystem service analyses by examining the effects that policies have on the ecosystem services, and by identifying the possible coherence problems. The possible coherence problems are examined by identifying trade-offs that are generated or aggravated by policies. This leads to three research questions: 1) Do specific policy outputs strengthen bioenergy production, which is a tangible service with established markets, more than carbon sequestration, which is an abstract service with less clear market-value, 2) Which of the specific policy outputs create trade-offs between the climate mitigating forest ecosystem services and which simultaneously support both services, and 3) Is the ecosystem service concept useful for analysing policy outputs and their coherence. We analyse forest related policies in Finland, where per capita GHG emissions are among the highest of the European Union member states (EEA, 2013). Finland's forest policies illustrate the tensions in the governance of forests for climate change mitigation in an interesting context, as forests have traditionally had high socio-economic significance. Three quarters of Finland's land surface is covered with forests with

more than half of this forest area being privately owned (Finnish Forest Research Institute, 2012). Forest policies have earlier promoted timber growth and removals, subsuming other goals (Hyytiäinen and Tahvonen, 2001; Ollonqvist, 2001; Primmer and Kyllönen, 2006; Kotilainen and Rytteri, 2011; Saarikoski et al., 2012). In line with global and European policy development, the national forest and energy policies have been recently reformed to adopt the goal of climate change mitigation (e.g. Ministry of Agriculture and Forestry, 2010; Ministry of Employment and the Economy, 2011). The coherence of the resulting mix of policies is a major point of interest in examining how trade-offs between ecosystem services can be balanced. 2. Materials and methods 2.1. Definitions In this study we focus on two forest ecosystem services that mitigate climate change, are recognised by policies and for which there is actual demand, i.e., they are currently used by humans. For carbon sinks this definition requires temporal operationalization. Generally the timescales needed for carbon sequestration assessments are long (decades, even centuries) due to slow changes in the carbon storages. In this study, the carbon sink is specified by the Kyoto treaty and its changes are evaluated over a timescale of less than 10 years. We have separated the supply and demand sides of ecosystem services by taking the definitions given by Burkhard et al. (2012) as a starting point: The demand for ecosystem service is the actual or potential usage or consumption of the service in a particular area over a given time period, and the supply of ecosystem service is the capacity of a particular area to provide the service. More specifically, in this study we have considered the borderline between supply and demand from a policy point of view. Thus the policies affecting forest owners were considered to affect the supply and the policies affecting all other actors further down the value chain (e.g. power plants, industry, consumers) were considered to affect the demand. Policy coherence is understood as an ability of policies to provide target groups with non-conflicting signals related to desired action (Mickwitz et al., 2009). Coherent policies thus succeed in reducing conflicts and promoting synergies between and within different policy areas (Nilsson et al., 2012). As there is a general agreement to promote both bioenergy and carbon sequestration, a coherent policy would consider both of these aims in a balanced manner and would make the potential trade-offs explicit. The signals in this study were examined by policy outputs, i.e. objectives and instruments defined in acts and policy programmes (Nilsson et al., 2012). The policy objectives and instruments cover policy components from objectives to mechanisms/tools according to the classifications by Howlett and Cashore (2009) and Dupuis and Biesbroek (2013). A policy can include one or several outputs and the policies that were selected for our study were assessed at the level of objectives such as strategic aims as well as fine-tuned instruments such as subsidies or obligations. For the purpose of this study, it was unfeasible to refine the classification of policy components beyond objectives and instruments. 2.2. Materials and analysis The material we analysed included policies that govern forest bioenergy and/or carbon sinks or the use of forests in general. Thus the overall policy areas we examined were related to forestry, energy and climate, and land use and nature conservation. The analysed policies were national, including those that implement EU policies and international treaties. In addition to the contemporary policies in force at the time of writing this paper, we also included all the policies that were in preparation at either the ministerial or the governmental level (Table 1). From the policies we identified the specific outputs, which have relevance regarding one or both of the ecosystem services. The

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Table 1 National and international policies that influence the assessed ecosystem services. The policy sector that governs the policy is given to all national policies. The abbreviations of the sector stand for Ministries of Agriculture and Forestry (MAF), Environment (ME), Employment and the Economy (MEE), Finance (MF) and full government (FG). Policy area and reference Forestry Acts 263/1991c 1093/1996 1094/1996 Act Not in Force (ANF) but passed and approved 100/2011 101/2011 National strategies and programmes MAF 2010 Planned Act Amendments (PAA) at the ministry level PAA 2012-1 PAA 2012-2 Government Decrees (Decree) 578/2012 Energy and climate Acts 1472/1994c 1260/1996c 446/2007c 1396/2010 311/2011a 393/2013a Government bill (Bill) for amending Acts 91/2012c National Strategies and programmes FG 2009 a

MEE 2011 FG 2013c Government Decrees (Decree) 128/2006 1313/2007 International treaties Kyoto 1 13/2005 Kyoto 2 Land use and nature conservation Acts 62/1991 1096/1996b 132/1999c 105/2009 Government resolutions ME 2008b a b c

Policy

Sector

Act on the Prevention of Insect and Fungi Damages in Forests Forest Act Act on the Financing of Sustainable Forestry

MAF MAF MAF

Amended Act on the Financing of Sustainable Forestry Act on Energy Support for Low-grade Timber

MAF MAF

Finland's National Forest Programme 2015 (2010)

MAF

Draught (8.2.2013) for the Government Bill for Amending Acts 1093/1996 and 39/1889 Draught (8.3.2013) for the Government bill for enacting an Act on the Prevention of Forest Damages and Repeal the Act 263/1991

MAF

Government Decree on the targeting of the farm investment subsidies in 2013

MAF

Act on Excise Tax on Liquid Fuels Act on Excise Tax on Electricity and Certain Fuels Act on the promotion of the use of biofuels for transport The Act on Production Subsidy for Electricity Produced from Renewable Energy Sources Emissions Trading Act Act on Biofuels and Bioliquids

MF MF MEE MEE MEE MEE

Government Bill for Amending Acts 1260/1996 and 1472/1994

MF

Government Foresight Report on Long-term Climate and Energy Policy: Towards a Low-carbon Finland National Renewable Energy Action Plan (NREAP) 2011 Long-term Climate and Energy Strategy, Government Report to Parliament 20 March 2013

FG

Government Decree for Buildings' Renovation, Energy And health Problem Subsidies Government Decree on the Common Terms of Granting Energy Subsidies

ME MEE

Kyoto protocol first commitment period 1997

FG

Kyoto protocol second commitment period 2012

FG

Wilderness Act Nature Conservation Act Land Use and Building Act Game Animal Damages Act

ME ME ME MAF

Government resolution for the Forest Biodiversity Programme METSO 2008–2016 (2008)

ME

MAF

MEE FG

National policy measure, which is created to implement the EC directives. National policy measure, which partly implements EC/EEC directives. National policy measure, which adapts to EC/EEC directives.

policy outputs were assessed by going through their effects on the ecosystem services. We identified the mechanisms by which these policy outputs may impact the demand or supply of forest bioenergy and/or carbon sinks. The impacts were assessed by reviewing scientific literature. The review allowed us to make qualitative conclusions on the direction of the impacts. To ensure validity, we focused mainly on studies assessing the Finnish boreal forests. The impacts on both of the ecosystem services were assessed separately and classified into four classes: 1) strengthening (increasing or maintaining), 2) weakening (decreasing), 3) simultaneously strengthening and weakening or 4) unknown. In addition, the impacts were classified as direct when the assessed ecosystem service was explicitly recognised in the assessed policies and indirect otherwise. After reviewing the literature, policy coherence was assessed by examining interactions that the policy outputs generated between the two ecosystem services. The interactions were grouped into three categories: mutual benefit (++), trade-off (+/−) and mutual loss (−−) following

Bennett et al. (2009) and Haase et al. (2012). The framework underlying the analysis is further explained in Fig. 1. Examining all the identified interactions together allowed us to provide an overall assessment of the policy coherence.

2.3. The resource supply and demand chains of the studied ecosystem services The impacts of the policy outputs were recorded along the resource supply and demand chains in order to locate the coherence problems and solutions. The resource supply chains of the strongly interlinked ecosystem services are illustrated in Fig. 2 and their operationalization in Finland is briefly explained here. Resources for forest bioenergy1 are mainly retrieved either directly from the forest or indirectly via forest 1

Forest bioenergy is termed as wood energy in Finnish policies.

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forest bioenergy is retrieved from secondary residues (e.g. black liquor, bark, sawdust and industrial chips). Wood that is mainly used in small houses as chopped firewood is called fuelwood. Resources for refined biofuels can theoretically come from all sources but the production of wood-based biofuels is currently only commencing (Hämäläinen et al., 2011). The demand for the use of wood as an energy resource has been recognised ever since the first national Energy strategy in 1979 (Helynen, 2004). Current policies related to forest bioenergy are numerous as this service is considered to conduce to reducing GHG emissions in energy production, creating employment and securing energy supply by the self-sufficient energy production (Kivimaa and Mickwitz, 2011). Unlike forest bioenergy, the forest carbon sink is a solely policy driven ecosystem service. The demand for this service was initiated by signing the UNFCCC agreement in 1992 and ratifying the Kyoto Protocol in 1997. The Kyoto protocol not only created the demand, but it also dictated which part of the service provision capacity is considered as the supply for the service. This accounting of the carbon sink supply as specified by the Kyoto protocol is reported annually in the National Inventory Report (NIR) (2013). In the accounting according to the protocol, the carbon sink is estimated by the carbon balance, where an increase in the forest carbon pools is regarded as a sink and a decrease an emission or a source. The forest carbon balance is estimated according to two articles in the protocol. According to Article 3.3, the changes in the forest land area are estimated by the reforestation, afforestation and deforestation activities. In addition, the direct greenhouse gas (GHG) emissions from silvicultural practices such as biomass burning, liming and fertilization are added to the carbon balance defined by this Article. Article 3.4 determines the carbon balance within the different carbon pools (biomass, soil, litter and dead wood) in forests, which are affected by forest management activities. The pool of harvested wood products is not accounted for in the carbon sink during the first Kyoto protocol, which is currently still reported, but it will be accounted for in the second Kyoto period. Currently, the calculations based on Articles 3.3 and 3.4 imply that Finland both generates emissions and has a major sink. According to the latest NIR (2013), the Finnish sink based on Article 3.4 was 10-fold compared to the emissions based on Article 3.3

Policies affecting climate change mitigation Ecosystem service B

Ecosystem service A

?

Demand Supply

Demand Supply

Ecosystem service B

+ –+

++

–

+ ––

+– –

Ecosystem service A Fig. 1. Illustration of the concepts used in this study. The bend arrows are the policy instruments and the enlarged box in the middle illustrates the interactions that the policy instruments generate between the two ecosystem services that we assessed. In this box, mutual benefit (++) is given in green, trade-off (+− or −+) in yellow and mutual loss (−−) in red.

industry (secondary residues) (Röser et al., 2008). These resource flows are strongly interlinked and usually harvested simultaneously. The provision of forest bioenergy in the form of wood chips, which mainly comprises of primary residues (wood not qualified for the industrial use e.g. residues from thinning and final cuttings) is rapidly increasing as the wood chips are used in heat or combined heat and power plants (Finnish Forest Research Institute, 2012). Still, more than half of all

Climate change mitigation Wood energy

Carbon sink

Side and waste products Wood products Biofuels

Wood chips

Litter and dead wood

Industry

Standing biomass

Logs & pulpwood

Soil

Fuelwood Forest growth

Biomass removal

6 4 2

no. of policies

Mutual loss

Forest area

Trade-off Mutual benefit

Fig. 2. A diagram of the flow of forest resources (land area, wood and carbon) into forest bioenergy and carbon sink ecosystem services. The dashed arrows indicate the additional carbon pools accounted in the carbon sink assessment only during the second Kyoto protocol commitment period. The circles indicate the total number of identified policy outputs (no. of policies) affecting either the supply or the demand of the services that are listed in Tables 2 and 3. The coloured inner circles indicate the number of those policy outputs that generate mutual benefit, trade-off or mutual loss to the assessed ecosystem services (see Fig. 1 for explanation).

M. Makkonen et al. / Forest Policy and Economics 50 (2015) 153–162

and 50% of the total GHG emissions of Finland, which can be seen to set the overall demand for this ecosystem service. According to the rules in force, the forest sink can only partly compensate the total GHG emissions. This cap on the demand has been set in order to ensure that other Kyoto protocol commitments are not undermined, that only human induced sinks are credited and that disturbances caused by extreme events do not risk the accounting (Ellison et al., 2011). 3. Results 3.1. The governance structure The policies that we identified to affect the supply and/or demand of the two climate change mitigating ecosystem services in Finland are governed by several sectors, i.e. they are spread horizontally across four ministries. The policies relating to energy and GHG emissions are governed by the Ministry of Employment and the Economy and the Ministry of Finance. Forest management and, land use and nature conservation, are governed by the Ministries of Agriculture and Forestry, and Environment respectively. All the identified policies are listed in Table 1. Most of the policies at the national level are influenced by EU policies, although some policy areas are exclusively national (Table 1). Notably nearly all of the policies governed by the Ministry of Agriculture and Forestry implement solely national policy because there is no common EU forestry policy. The only exception is the Act 263/1991 on the part of aerial spraying of biological pesticides that is based on an EU Directive (Table 1). 3.2. Policy emphasis placed on the two forest ecosystem services The analysis shows that the policy outputs with strengthening and weakening effects on the demand and supply of the two ecosystem services have reinforced forest bioenergy more than the carbon sink (Tables 2, 3 and 4). Forest bioenergy has been strengthened by numerous policy objectives and instruments that have affected the service positively through direct steering. Especially the demand for forest bioenergy has been directly reinforced by several objectives and instruments (Tables 2 and 4). Including both direct and indirect governing, we did not find any policy outputs that would clearly weaken the demand for forest bioenergy. The Kyoto protocol with the EU member states' jointly agreed GHG emission targets (Kyoto 1 and 2)2 and a national climate and energy strategy (FG, 2013)2, have required an increased use of renewable energy (Table 2). In Finland, forest bioenergy has been considered central in meeting these requirements, and thus all the three national strategies concerning energy and climate (FG, 2009; FG, 2013; MEE, 2011)2 have aimed at increasing the use of forest bioenergy, and wood chips in particular. The demand for forest bioenergy (or renewable energy in general) has also been strengthened financially further down in the demand-chain by taxation, subsidies and exemptions from buying emission rights. These financial instruments have been directed to energy producers (e.g. Acts 1396/2010, 1472/1994)2, industry (Act 311/2011)2, business companies and municipalities (Decree 1313/ 2007)2, small housing (Decree 128/2006)2 and rural areas (Decree 578/ 2012)2. The policy demand for the carbon sink has been limited to the Kyoto protocol's two commitment periods, in which the forest carbon sink could only partly compensate the GHG emissions. In addition, the National Forest Programme (MAF, 2010)2 has acknowledged the demand for the carbon sink as an objective but has not operationalized it with any specific instruments. The only direct encouragements for the supply of the carbon sink have been statements in national strategies and programmes, and similarly to the national objective on the demand side, they have not been operationalized by any instruments (Table 3). These statements 2

All the policy references in the Results and Discussion are given in Table 1.

157

included objectives to restrict the forest land decrement (FG, 2013; MAF, 2010)2 and to promote silviculture and forest improvement (FG, 2009; MAF, 2010)2. The supply of bioenergy, in contrast to the supply of the carbon sink, has been strengthened with one direct instrument, which has been grounded with an objective and secured by Act Amendments. The Act on the Financing of Sustainable Forestry (1094/1996)2 and the planned Act Amendments (100/2011 and 101/2011)2 have all subsidised the harvesting of bioenergy resources. In addition to direct subsidies for harvesting bioenergy resources, other incentives to remove biomass have also strengthened the supply of forest bioenergy. Examples include subsidies for the thinning of young stands (Act 1094/1996)2, the specified aim to increase the industrial harvesting volumes (MAF, 2010)2 and the explicitly mentioned possibility to increase total harvest volumes by the planned removal of the limitations on the regeneration fellings (PAA 2012-1)2. There have also been numerous other policy outputs steering the studied ecosystem services more indirectly through nature protection, forest land area and forest management in general. Overall their impacts have been rather limited. For example, 11 objectives and instruments have indirectly weakened the supply of forest bioenergy (Tables 3 and 4) but their effects were spatially limited. The effects of all of the policy objectives and instruments on the demand and the supply of the two services are detailed in the supplementary material, Appendices A and B, respectively. 3.3. Coherence among policies We analysed policy coherence based on the impacts of all the assessed objectives and instruments. The analysis revealed that tradeoffs between the two forest ecosystem services have mainly been generated by policy objectives and instruments targeting forest bioenergy either directly or closely (Fig. 2, Tables 2 and 3). These trade-offs have not been made explicit nor alleviated in the policy documents themselves. On the demand side, the instruments and objectives that have strengthened forest bioenergy use directly or via renewable energy in general, have indirectly weakened the demand for the carbon sink. This situation has arisen because forest bioenergy has been considered to be carbon neutral. Under current regulations, the use of forest bioenergy has therefore not increased the demand for the carbon sink and moreover, if forest bioenergy replaces fossil energy, it decreases the demand for carbon sequestration (see Appendix A). Thus, the policy demand for increased use of wood chips (MEE, 2011, FG, 2013)2 supported by subsidies (Act 1396/2010)2 and other instruments has decreased the demand for the carbon sink. This conflict can be observed in the Kyoto protocol instruments. Although the protocol has generated similar effects (simultaneously strengthening and weakening) on both of the ecosystem services, it has favoured forest bioenergy more. More specifically, both commitment periods of the Kyoto protocol have allowed a substantial increase in the consumption of forest bioenergy in accordance with the national targets for forest bioenergy, whilst they have set the demand for the carbon sink lower than its current supply (see Appendix A). Similar to the demand side, the conflicts on the supply side have emerged around policies relating mainly to forest bioenergy and biomass removal. Financing the harvesting of forest bioenergy resources, limits for the regeneration fellings and the aim to increase the harvested volumes have all generated trade-offs between the ecosystem services. Mutual benefit, i.e., win–win situations harnessing both ecosystem services, has been generated by policy instruments related to climate change mitigation in general or objectives and instruments addressing the preconditions for producing both ecosystem services. The Kyoto protocol has set obligations to reduce the fossil fuel GHG emissions and as the methods have not been specified, they have strengthened the demand for both ecosystem services. On the supply side, several of the objectives and instruments that have been closely related to forest growth and forest area have generated a mutual benefit to the ecosystem services. Most of these have affected both ecosystem services

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Table 2 Identified strengthening “+”, weakening “−”, both strengthening and weakening “+/−” or not known “?” effects that the policy outputs have on the demand of the carbon sink and forest bioenergy based on the literature review presented in Appendix A. The parentheses in the effects indicate that the effect by the output is indirect. The effects are listed underneath the resource flow compartments, visualised in Fig. 2, that they most directly link to and the mutual loss, trade-off or mutual benefit interactions between the two ecosystem services that the effects generate are highlighted by red, yellow and green according to Fig. 1. Policy outputs were further classified by indicating the dominance of objectives or instruments. The references are listed in Table 1. Please note that policies may appear many times in the table.

Resource flow compartment

Reference

Policy output

Objective/

Forest

instrument

bioenergy

Carbon sink

Climate change mitigation Obligation for EU and its member states to cut down the GHG emissions by 8% from the year 1990 by the year 2012 Obligation for EU and its member states to cut down the GHG emissions by 20% (compared to the emissions in 1990) and 16% target outside the emission trading system (compared to the year 2005) by the year 2020 Forest bioenergy A substantial increase in the use of energy wood is needed in order to reach the national GHG emission target (−80%) by the year 2050 The consumption of renewable energy should increase up to 38% of all energy consumption by the year 2020 Efforts will be made to ensure that the EU sustainability criteria for bioenergy does not jeopardise or prevent the use of sustainable domestic biomass in energy production and that the burning of sustainable biomass remains carbon neutral in emission inventories The production and use of energy produced from wood sources should be increased Subsidy should be provided to wood based heat and electricity production plants Subsidy to wood based heat and electricity production plants

Kyoto 1

Instrument

(+)

(+)

Kyoto 2

Instrument

(+)

(+)

FG 2009

Objective

+

(−)

FG 2013

Objective

(+)

(−)

FG 2013

Objective

(+)

(−)

MAF 2010

Objective

+

(−)

MEE 2011

Objective

+

(−)

Act 1396/2010,

Instrument

+

(−)

Act 1472/1994, Act 1260/1996, Bill 91/2012 Act 311/2011

Instrument

+

(−)

Instrument

(+)

(−)

Decree 1313/2007

Instrument

(+)

(−)

Financing the heating system shift into renewable energy based in housing

Decree 128/2006

Instrument

(+)

(−)

Financing projects and investments concerning bioenergy in the rural areas

Decree 578/2012

Instrument

(+)

(−)

Obligation to enhance the use, development etc. of renewable energy sources

Kyoto 1

Instrument

(+)

(−)

Increase the use of wood chips in CHP production and separate heat production to 25 TWh (equivalent to 13.5 million m3 of wood chips) per year by 2020. Biofuels

MEE 2011, FG 2013

Objective

+

(−)

Obligations for the fuel suppliers to supply biofuels Sustainability criteria for biofuels and bio liquids Carbon sink Carbon sink effects should be promoted

Act 446/2007 Act 393/2013

Instrument Instrument

(+) (+)

(−) (−)

Taxation favours wood based energy resources compared to fossil fuels and other energy resources Plants that use only biomass are exempted from buying emission rights Financing the investments concerning the use of renewable energy of private businesses, municipalities or other communities

Wood chips

Carbon sink according to Article 3.4 can compensate 0.59 milj. t CO2 of the GHG emission and the emissions caused according to the Article 3.3 during the years 2008−2012. During the years 2013-2020, carbon sink according to Article 3.4 can compensate 2.45 milj. t CO2 of the GHG emission if the carbon balance > −23 milj. t CO2. Furthermore the balance should not be lower than −20.5 milj. t CO2 as this would be considered as emissions. The GHG emissions in the Article 3.3 cannot be compensated by the Article 3.4 sink

indirectly. Examples of these include obligations to create new sapling stands (Acts 1093/1996, 263/1991 and PAA 2012-2)2, limiting prescribed burnings (ANF 100/2011)2 and distributing financial compensation after forest damages (Act 105/2009)2. The objectives, which have governed carbon sink supply directly and yet generated mutual benefit, have included the strategic policy objectives on increasing silviculture (FG, 2009, MAF, 2010) 2 and restricting forest conversion (MAF, 2010, FG, 2013)2. These objectives have been targeted at the early parts of the supply chain, which have further strengthened the

MAF 2010

Objective

(?)

+

Kyoto 1

Instrument

(+/−)

+/−

Kyoto 2

Instrument

(+/−)

+/−

supply of forest resources for other ecosystem services including also the provisioning services. Finally we identified three policy instruments and one objective, for which the impacts could not be classified into mutual benefit or tradeoffs. Simultaneously strengthening and weakening impacts on both ecosystem services were found in the policy outputs that govern land use (Act 132/1999)2, forest management from the part of allowing uneven-aged forestry (PAA 2012-1)2, and compensation of GHG emissions by the forest carbon sink according to the Kyoto protocol (Kyoto

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Table 3 Identified strengthening “+”, weakening “−”, both strengthening and weakening “+/−” or not known “?” effects that the policy outputs have on the supply of the carbon sink and forest bioenergy based on the literature review presented in Appendix B. The parentheses in the effects indicate that the ecosystem service is indirectly affected by the output. The effects are listed underneath the resource flow compartments visualised in Fig. 2 that they most directly link to and the mutual loss, trade-off or mutual benefit interactions between the two ecosystem services that the effects generate are highlighted by red, yellow and green according to Fig. 1. Policy outputs were further classified by indicating the dominance of objectives or instruments. The references are listed in Table 1. Please note that a given policy may appear many times in the table.

Resource flow compartment Policy outputs Wood chips Financing should be given to energy wood harvesting from young forests Financing the energy wood harvesting from young forests

Biomass removal The Industrial wood harvesting volumes can be significantly increased Financing should be given to preserve and sustain forest areas with high biodiversity value in southern Finland Protecting public or private forests or preserving forests as natural stands Financing permanent and temporary protection of private forest with high biodiversity value in southern Finland Financing (Environmental support subsidy) biodiversity and other than wood production activities in silvicultural forests Financing the tending of young stands Obligation to remove damaged or cut trees in the managed forests Tree age and trunk size limitations for the regeneration and intermediate fellings The limits for regeneration fellings would be removed Limits for the fellings in order to store biodiversity, landscape etc. Limits for the origin of biofuel and bio liquid resources Forest area Restrict the shift of forest land into other land use categories In various fields of operation, the aim is to keep deforestation at a minimum Obligation to create a new sapling stand after regeneration fellings Financing forest regeneration Shield forests and forest areas that protect the tree line Obligation to create a new sapling stand after a forest damage Land use for forest areas versus parks, recreation areas, settlement/urban areas, agricultural areas etc. Removal of the obligation to regenerate a forest, of which area is less than 0.3 ha Removal of the obligation to regenerate a forest on the unproductive drained organic lands Forest growth Aim to increase the silviculture (and forest improvement) Financing the prescribed burnings as a site preparation method Financing the remedial fertilisation Financing the building and renovation of forest roads The financial compensations after forest damages Allowing uneven-aged forestry Limits for the selection of tree species Financing the prescribed burnings is limited only to nature management Financing the ditch cleaning and supplementary ditching

1 and 2)2. One mutual loss has been generated by financing prescribed burnings (Act 1094/1996)2. However, the use of this specific instrument has almost ceased (Finnish Forest Research Institute, 2012) and it is strongly restricted in the amendments to the Act (ANF 100/2011)2. We also identified several outputs where the sign of the impact was clear for one ecosystem service but not for the other. For instance, protecting forest (e.g. Act 1096/1996 and ME 20082) has weakened the supply of forest bioenergy; whilst its effect on the carbon sink has not been clear (Appendix B). Similar examples are instruments governing management of peatlands under forestry, i.e. financing ditch cleaning and

Reference

Objective/

Forest

instrument

bioenergy

Carbon sink

MEE 2011

Objective

+

(−)

Act 1094/1996, (ANF 101/2011 + ANF 100/2011)

Instrument

+

(−)

MAF 2010

Objective

(+)

(−)

MAF 2010

Objective

(−)

(+/−)

Act 1096/1996, Act 62/1991 Act 1096/1996, Act 1094/1996, ME 2008 Act 1094/1996, ME 2008

Instrument

(−)

(+/−)

Instrument

(-)

(+/−)

Instrument

(−)

(?)

Act 1094/1996 Act 263/1991, PAA 2012-2 Act 1093/1996

Instrument Instrument

(+) (+)

(+/−) (+/−)

Instrument

(−)

(+)

PAA 2012-1 Act 1093/1996 Act 393/2013

Instrument Instrument Instrument

(+) (−) (−)

(−) (?) (+/−)

MAF 2010 FG 2013

Objective Objective

(+) (+)

+ +

Act 1093/1996 Act 1094/1996 Act 1093/1996 Act 263/1991, PAA 2012-2 Act 132/1999

Instrument Instrument Instrument Instrument

(+) (+) (+/−) (+)

(+) (+) (+) (+)

Instrument

(+/−)

(+/−)

PAA 2012-1

Instrument

(−)

(+/−)

PAA 2012-1

Instrument

(−)

(+/−)

FG 2009, MAF 2010 Act 1094/1996 Act 1094/1996 Act 1094/1996 Act 105/2009 PAA 2012-1 Act 1093/1996 ANF 100/2011

Objective Instrument Instrument Instrument Instrument Instrument Instrument Instrument

(+) (−) (+) (+) (+) (+/−) (−) (+)

+ (−) (+/−) (+) (+) (+/−) (+/−) (+)

Act 1094/1996, ANF 100/2011

Instrument

(+)

(+/−)

supplementary ditching (Act 1094/1996)2 and removal of the obligation to regenerate forest on peatland (PAA 2012-1)2. 4. Discussion 4.1. Policies favour the ecosystem service that has established markets Our analysis of policies addressing two climate change mitigating forest ecosystem services in Finland shows that policy outputs advance forest bioenergy more than carbon sequestration. Overall, current policies

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Table 4 Summary of the results shown in Tables 2 (a) and 3 (b). The number of objectives and instruments whose effects on forest bioenergy and carbon sink are strengthening “+”, weakening “−”, both strengthening and weakening “+/−”, and not known “?” are summarised together with the ratio of policy outputs that have a direct effect compared to the total number of identified policy outputs. The number of direct objects and instrument is given in parentheses in all the sections where they have been identified. a) Demand

Forest bioenergy + − +/− ? Direct/total Carbon sink + − +/− ? Direct/total

The demand for the services, on the other hand, is steered by the Ministry of Finance and the Ministry of Employment and the Economy, whose interests in forests are mainly in the provisioning services thus permitting more direct steering to facilitate forest industry and bioenergy. 4.2. Which policies generate trade-offs and which promote both services

b) Supply

Objectives

Instruments

Total

Objectives

Instruments

Total

6 (4) 0 0 1

11 (2) 0 2 0

17 0 2 1 6/20

5 (1) 1 0 0

12 (1) 10 3 0

17 11 3 0 2/31

1 (1) 6 0 0

2 9 2 (2) 0

3 15 2 0 3/20

3 (3) 2 1 0

8 3 12 2

11 5 13 2 3/31

have dominantly strengthened both demand and supply of forest bioenergy. Especially demand for bioenergy has been supported with specific national objects and instruments, which indirectly have reduced the carbon sink. In contrast, the governing of the carbon sink has not been operationalized in terms of any national instruments. The supply and demand of this ecosystem service have been directly governed only by national strategies and the Kyoto protocol. Our findings imply that policies have both directly and indirectly strengthened more the forest ecosystem service that has markets and market value compared to the service that is not exchanged in markets. This is in line with the theoretical expectations of ecosystem service literature (e.g., Fisher et al., 2009) and resonates with policy analyses that have identified how strong economic actors engage in policy (Cashore and Vertinsky, 2000; Howlett and Rayner, 2007). The focus being on steering the market, rather than on securing the environmental public good, is in conflict with environmental policy and economics that suggest ecosystem services to require balanced public governance (Boyd and Banzhaf, 2007). Other collective benefits than the provisioning of ecosystem services may also have contributed to the market orientation. For example, the creation of employment and the perceived security of domestic energy sources are likely to provide collective justifications for public policies supporting a market focus (Åkerman et al., 2010). The result of the current policy focus and volume has left the regulating ecosystem service, characteristically a public good, with little governance. Carbon sequestration governance stands on uncertain foundations, as it relies only on markets that are new and solely policy based (Corbera and Brown, 2008). These markets are sensitive to political changes and can in the worst case disappear literally overnight. In addition to finding that policy outputs enhance forest bioenergy more than carbon sequestration, we also find that the demand of forest bioenergy has been steered more directly than the supply of the same service. An obvious explanation could be that there is currently no shortage of forest biomass in Finland. In contrast to the current steering of the demand for forest bioenergy, earlier in the 1960s Finland's forest policy aimed at securing raw material for the forest industry by focusing the steering on forest productivity, i.e. the supply of the provisioning service (Kotilainen and Rytteri, 2011). The difference in the governance approaches between timber production in the 1960s and current forest bioenergy can be explained by the shift in the social concern over forest resource supply versus demand. Another possible explanation may be the difference in policy sectors. The supply is governed by the Ministry of Agriculture and Forestry and the Ministry of the Environment, which both have a broad range of interests in forest ecosystem services including not only provisioning but also regulating and cultural services.

We have explored policy coherence among policies governing the two forest ecosystem services by looking at mutual benefits and tradeoffs in the impacts of policies, and found clear differences among the policy impact areas. Policies closely supporting forest bioenergy, have commonly generated a trade-off in terms of reduced carbon sequestration. These identified trade-offs are expected as we find policies strengthening more the provisioning service of forest bioenergy than the regulating service of carbon sequestration. It has previously been found that increasing the production of provisioning services generally weakens the regulating and supporting services (e.g. Rodriguez et al., 2006; Hauck et al., 2013). Our assessment supports these findings, but shows further that the trade-offs generated by the policies strengthening the forest bioenergy demand are inevitable, as long as energy production from forest biomass is taken as “carbon neutral” and therefore directly decreases the demand for carbon sequestration. Mutual benefits have been generated by those objectives and instruments that relate closest to the general aim to mitigate climate change or generally to the role of forest in contributing to both services. At later stages the policies can be made coherent by addressing the trade-offs explicitly, as in the Kyoto protocol. But in the Kyoto protocol, the coherence has remained only at the policy level as it has supported the increase in forest bioenergy and simultaneously kept the demand for the carbon sink lower than its current supply. Therefore, it appears that only those general policy mechanisms, which either specify general targets to be reached or have concentrated only on providing the basic resources, have been able to jointly increase both services. This finding is supported by Nelson et al. (2008), who assessed the trade-offs between carbon sequestration and species conservation in policy incentives. They found that increasing both targets succeeds best by more general and less specified policies. From a policy coherence perspective, these ecosystem services represent a situation where full coherence is not attainable and probably not even desirable (see Jordan and Halpin, 2006). If policies supporting one ecosystem service are abandoned due to their effect on the other service, the end result may be even more harmful, e.g. increased use of fossil energy. The challenge lies in developing policies that can ensure an informed and balanced management of both services that would support the aim, articulated by Nabuurs et al. (2007) and Obersteiner et al. (2010), of fitting these two ecosystem services in the same forests. Our analysis is a first step in this direction by making the links between the existing policy outputs and the services visible. 4.3. The usefulness of ecosystem service concept in policy evaluation In this paper, we have explored the proposal that the use of the ecosystem service concept would support decision making (Norgaard, 2008; Daily et al., 2009, de Groot et al. 2010) and enable a comprehensive evaluation of policy impacts (Hauck et al., 2013). We take the challenge further by analysing the impacts and trade-offs generated by a broad range of policy outputs. This analysis is fruitful for several reasons. First, we analyse the effects separately on supply and demand, which allows identifying very different impacts. Second, we can identify numerous indirect impacts and links between policies that otherwise easily remain invisible in most sector specific policy evaluations. Third, our analysis provides a framework for empirical assessments of policy impacts on ecosystem services that have been generally lacking (Urwin and Jordan, 2008; Primmer and Furman, 2012; Hauck et al., 2013).

M. Makkonen et al. / Forest Policy and Economics 50 (2015) 153–162

A major advantage of an approach focusing on ecosystem services is the drive to assess the impacts of policies simultaneously on several goods and benefits that ecosystems provide to humans. This gives a holistic view of the policy coherence from an ecosystem service perspective. Our study with two forest ecosystem services has provided a first step along this line. As the knowledge of the interactions between various ecosystem services as well as the pathways of policy impact increases, the assessment can be extended to cover more ecosystem services. The lack of some specific data is a potential problem for comprehensive analyses. In our case it is, for example, unclear how the well manifested policy outputs on ditch cleaning and forest biodiversity conservation affect the supply of carbon sequestration. More research is thus needed to better grasp the impacts of these policies on ecosystem services. Our approach also stresses the need to examine the multitude of existing policy outputs and the current market systems that introduce strong path dependencies in the processes. Gradual changes and feedback loops may change the system, but given the complexity (Fig. 2) it is difficult to know how it will change. If, for example, the EU introduces sustainability criteria on solid bioenergy fuels analogous to those for liquid fuels (Act 393/20132 implementing the EU RES-directive), the incentives for using bioenergy are likely to change. In these kinds of situations, our approach can highlight the relevant trade-offs and chains of effect in ecosystem services that the new policy-mix will generate. 5. Conclusions Our study has analysed the coherence of the broad and complex mix of policy outputs affecting two different forest ecosystem services that mitigate climate change: forest bioenergy and carbon sequestration. The analysis revealed that existing policy outputs promote bioenergy with more numerous and more specific instruments compared to carbon sequestration. The finding demonstrates that a tangible ecosystem service with established markets is governed much more rigorously than the one for which markets are only emerging and remain highly uncertain. This implies that current markets and governance are not set up to balance the two services. In particular those policies that steer closely forest bioenergy in a targeted fashion tend to generate trade-offs between the ecosystem services. In contrast, general policies promote the supply and demand of both services. Although full policy coherence is probably not possible, the bias favouring certain ecosystem services and the multifaceted indirect and unintended effects of policies should be explicitly addressed in policy design and evaluation. Our study demonstrates that it is possible to meaningfully analyse forest related policies from an ecosystem service perspective, provided that one pays attention to the multiple functions of forest ecosystems and the policy induced trade-offs between different ecosystem services. This can raise new types of policy debates, but an analysis of ecosystem services will not necessarily change policy making itself. In the short run, the dominance of the tangible services with established markets can be so strong that novel views are disregarded. In the long run, the concept may change the way policies are developed by altering the framing of the use of ecosystems. Acknowledgements Support from the Ministry of Agriculture and Forestry (project POLKEVA), the Academy of Finland (grant 259929, GREENPOL) and European Union (FP7 grant nr 244065, POLICYMIX) is gratefully acknowledged. We thank the two anonymous referees for their constructive comments, which clarified the assessment and the argumentation. Appendices A and B. Supplementary data Supplementary data to this article can be found online at http://dx. doi.org/10.1016/j.forpol.2014.09.003.

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