Finland, too, is finding that expanding its Natura 2000 network and designating new protected areas puts the European Union's biodiversity targets on a collision course with a powerful Finnish forest sector built on private ownership rights. Although the country is moving towards voluntary solutions, designating new protected areas still gives rise to legal, financial and social conflicts.
The current situation – designating new protected areas
Finland's Natura 2000 network already covers around 5 million hectares, but some argue this is not enough to secure favourable conservation status for all habitats, particularly in the south of the country.
The main battle at present is over implementation of the European Union's Nature Restoration Regulation and the inclusion of the remaining “primeval and old-growth forests” in protected zones. The Finnish government recently agreed to protect an additional 30,000 hectares of state forest, but some scientists consider this insufficient, arguing that the criteria exclude many forests over 100 years old that they regard as ecologically “highly valuable”.
Most of the large protected areas lie in Lapland and the north of the country. In southern Finland, where forests are most productive and, according to environmental campaigners, biodiversity is most at risk, protected areas are small and fragmented. There is also sharp disagreement at present between the Finnish government and the European Commission over what counts as protectable “old-growth forest”. In the view of officials in Brussels and local environmental campaigners, the government's high thresholds for age and wood structure artificially shrink the area that qualifies for protection in Finland. Campaigners and critics of the sector point out that many voluntary conservation agreements with private owners run for “only” 10 to 20 years, which they say does not guarantee long-term habitat stability.
The view of forest owners in Finland
In Finland, private forest owners (around 600,000 individuals) manage some 60% of productive forest, which means their position determines whether any reform succeeds. This is quite unlike Latvia, where for decades forest and land owners have been unable to obtain either adequate compensation or the right to manage their own property free of outside control, at a time when an irresponsible or malicious so-called expert can simply “find something” for the sole purpose of stopping a person from acting.
The Central Union of Agricultural Producers and Forest Owners in Finland (MTK) firmly opposes any compulsory designation of new areas or “top-down” regulation. The experience of the first Natura 2000 mapping in the 1990s left owners deeply distrustful of state institutions, which they reasonably viewed as an attack on private property rights. Owners have no objection to nature conservation as such, provided it is compensated in full at the market value of the timber and the profit foregone. Studies show that Finnish owners voluntarily leave around 1.1 million hectares of forest unmanaged and protected, without any state assistance or registration, for personal, aesthetic or recreational reasons. They prefer to decide for themselves rather than follow officials' instructions.
Proposals and solutions
We have written about Finland's situation before; here the saying holds true – “repetition is the mother of learning”. Several models are being developed in Finland to secure habitat protection while preserving social peace.
Scaling up the METSO programme is central to this effort. The programme is one of Finland's success stories: forest owners voluntarily enrol their own forests for protection, either temporarily or permanently, and receive tax-free compensation. There are proposals to significantly increase state funding for the programme to meet high demand. Ecological compensation, meanwhile, is a mechanism under which construction or industrial companies that disturb nature in one location pay private forest owners to create or restore a new protected area – a Natura 2000 equivalent – elsewhere. Finland's large forest industry groups – Metsä Group, UPM and Stora Enso – are increasingly offering their timber suppliers free habitat mapping and premiums for more nature-friendly harvesting, for example retaining more deadwood and ecologically valuable trees.
Finland and Latvia take starkly different approaches to nature conservation in private forests. Where Finland relies on market-economy principles and voluntary participation, Latvia relies on administrative bans and fixed compensation, which breeds constant dissatisfaction among forest owners.
METSO programme – how does it work?
Finland's METSO programme (2008–2025) is a payment-for-ecosystem-services scheme. It is built on the principle that the state buys biodiversity from the owner as a commodity. Owners can choose between three levels of protection.
The first level is permanent protection. Here the owner sells the land to the state or establishes a private nature reserve. The value of the land and timber is reimbursed in full at market prices, and the compensation received is entirely tax-free.
The second level is temporary protection. The owner signs a contract for 10 to 20 years, undertakes not to fell the forest, and receives regular payments for the profit foregone while retaining ownership.
The third level covers biodiversity maintenance work. The state fully funds specific measures in the forest, such as the controlled burning practised in Finland or habitat restoration, at no cost to the owner.
The amount of compensation is not set at a fixed rate per hectare. It is calculated using specialised software that takes into account the timber's immediate market value – in other words, what the owner would earn by felling the forest today. The stand's age, its future growth potential and an ecological bonus depending on the presence of unique species or structures are also assessed. For leaving 20 hectares of valuable forest untouched for 20 years, a Finnish owner can receive around EUR 14,000, while for permanent protection the sum covers the full commercial value of the timber and land.
The role of European funds and state aid in compensation
EU structural funds and the Common Agricultural Policy provide significant co-financing for forest compensation, though their use is constrained by strict European Commission state-aid rules.
In areas already formally included in the Natura 2000 network or in micro-reserves, EU fund regulations require that support be paid only as an annual per-hectare area payment. In such cases the European Commission does not permit one-off capital compensation for the loss of property value.
Outside the Natura 2000 network, states have a freer hand. Finland uses its national budget to keep the METSO programme flexible and to pay full compensation, while drawing on EU funds for nature-restoration and education projects.
Criticism of Latvia's approach
Latvia's forest and land owners regard the country's system, built on micro-reserves and various nature reserves, as unfair and economically ruinous, for several substantial reasons.
A financial penalty for good management
In Latvia specifically, micro-reserves are created on a compulsory, “top-down” basis. If an owner has looked after a forest and a valuable habitat has developed in it, or a protected bird has settled there, the state “protects” the area without the owner's consent. Nature conservation of this kind is perceived in Latvia as a punishment, not as an honour or a business opportunity.
Compensation out of step with the market
In Latvia, the state pays a fixed compensation of around EUR 160 a year per hectare for forest in a micro-reserve, where any economic activity is banned. This is wildly out of proportion with market prices. The market value of harvesting rights on one hectare of mature spruce or pine forest can reach EUR 15,000–20,000. For an owner to recoup the current value of their forest through an annual payment of EUR 160, it would take almost 100 years, without even accounting for inflation. The compensation received is, moreover, taxed under the general rules.
The Constitutional Court's reasoning
Although Latvia's Constitutional Court has ruled that the existing level of support is formally consistent with the Constitution, the judges assessed the legal framework, not economic fairness. The court noted that the state has the right to restrict property in the public interest. In practice, however, owners of valuable, mature forest and owners of low-value young stands are paid the same amount, which leaves forest owners who have invested in their land at a considerable disadvantage. It is a rather “Bolshevik” position.
The situation in Latvia – the impossibility of a state buy-out, and other problems
Unlike Finland, where the state buys back land at market value, Latvia's land buy-out programme is effectively frozen, or burdened with enormous waiting lists, for lack of funds. The owner remains the land's registered owner on paper and pays real-estate tax on it – with discounts, admittedly – but cannot actually make use of their capital. Nor is there any contractual flexibility in Latvia. A restriction is permanent and is lifted only in extremely rare cases, when a species has vanished completely from the site in question – and even then, “another species turns up” and the restriction is not lifted.
This is illustrated clearly by a calculation of the financial losses for a 10-hectare stand of mature, commercially valuable spruce or pine forest on which a complete ban on economic activity is imposed.
Take a 10-hectare area of spruce or pine stand that has reached final-felling age with a very good stocking density of 300 cubic metres per hectare. The total volume of timber in this case is 3,000 cubic metres. Assuming an average net price, after harvesting and transport costs, of around EUR 50 per cubic metre, the immediate market value of the harvesting rights to such a forest is EUR 150,000.
In Latvia, once a micro-reserve or new nature reserve is created, the owner loses the right to carry out clear-felling. Their financial position changes immediately: the owner instantly loses access to that EUR 150,000 in capital. Taking this further – the state pays a fixed EUR 160 per hectare per year in support. For 10 hectares, the owner receives EUR 1,600 a year. For a forest owner to recoup the original value of their forest – EUR 150,000 – through such an annual payment would take almost 94 years. Once the fall in the value of money, or inflation, is taken into account, along with the fact that timber in a forest eventually becomes overmature, starts to rot or is destroyed by pests, the annual payment does not even cover the real losses. The owner suffers a direct capital loss of roughly 80–90% of the value of their property.
The situation in Finland – application of the METSO programme
If a valuable habitat is found in a private forest in Finland, the state does not impose a penalty but offers a deal instead. The owner faces two main financial scenarios. The first is permanent protection, where the owner chooses to establish a private nature reserve or sell the land to the state. The state assesses the market value of the timber – using the same figures as in the Latvian example, EUR 150,000 – and adds the value of the land. In Finland, the owner receives a one-off compensation payment in full, amounting to roughly EUR 150,000 to 160,000. This payment is tax-free in Finland, meaning the owner receives the entire sum and can reinvest it immediately elsewhere – for example, buying another forest for commercial use. The owner's loss in this case is EUR 0.
The second scenario for a Finnish forest owner is so-called temporary protection, for, say, 20 years. The owner retains ownership of the land but undertakes not to touch the forest for 20 years. A compensation calculation is made, projecting the growth in timber value and applying a theoretical interest rate for tying up capital, typically around 4–5% a year of the forest's value. For 10 hectares of such forest, the owner receives a one-off or instalment payment of roughly EUR 40,000 to 50,000 for this 20-year period. Once the 20 years are up, the contract ends: the forest and the timber still belong to the owner, who can then choose either to sign a new contract or to harvest. The losses are minimal or non-existent, since the capital is preserved and has generated an annual return.
What Finland can do and Latvia cannot
While a forest owner in Finland receives the full market value of their property in cash during the conservation process and does not lose a single cent, for a forest owner in Latvia a micro-reserve means real, immediate capital tied up indefinitely, with the compensation offered by the state failing to cover even bank loan interest, let alone inflation.
Sources: Finnish and Latvian information websites and materials