National policy options for forest land-use management in Finland: The forest will echo your call

Mikhail Vainchtein and David Haugh

No 1854, OECD Economics Department Working Papers from OECD Publishing

Abstract: Finland is the most forested country in the OECD but it is not on track to meet its ambitious nationally set target of net zero greenhouse gas emissions by 2035. The main reason for this is that over the past 15 years the country’s vast forests have transformed from a large net carbon sink to a net carbon emitter when forest land soil emissions are included. Increased harvesting, slower forest growth, and increasing soil emissions due to past peatland drainage, climate change and improved emissions measurement have played a role in this shift. Improving forest land-use management to reverse this trend appears to be the most cost-effective way to meet Finland’s climate mitigation targets. It could also have significant other environmental benefits including improving biodiversity and water quality. While the current forest policy framework contains multiple objectives, including sustainability, it places a lot of weight on economic output and more could be done to reward the ecosystem services forests provide. This background paper to the OECD Economic Survey of Finland 2025 explores options for incentivising greater carbon storage in forests and forest land, while maintaining a profitable forest products industry, protecting biodiversity and achieving other environmental and social goals.

Keywords: Biodiversity conservation; Carbon credit markets; Carbon pricing; Climate change mitigation; Continuous cover forestry (CCF); Ecosystem services; Environmental regulation; Finland climate policy; Forest carbon sinks; Greenhouse gas emissions; Land-use; land-use change and forestry (LULUCF); Market-based instruments; Nature value markets; Peatland management; Sustainable forest management (search for similar items in EconPapers)
JEL-codes: Q01 Q15 Q23 Q24 Q28 Q51 Q54 Q56 Q57 Q58 (search for similar items in EconPapers)
Date: 2025-12-23
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