Latvia has the opportunity to find the most suitable and successful solutions in land management, while at the same time achieving a rise in prosperity, leaving a positive impact on the social environment and doing no harm to nature conservation.

These conclusions emerged in a video discussion titled “Challenges of tax policy – economic development and the land resource sectors”, organised by the magazine “Dienas Bizness” and the Latvian forestry and related industries portal zemeunvalsts.lv. The most important factor in achieving this goal was said to be a shared understanding and an ability among different groups in society to talk to one another, as well as the ability to steer discussions.

Everyone has their own understanding

“The difficulty is not adapting to the new economic and political conditions, but rather the questions of information exchange and knowledge transfer, which matter far more, because many people hold views about the very large industries and that is where the clash of opinions arises, yet steering these processes is not at all simple,” explains Uldis Biķis, Chairman of the Supervisory Board of AS Latvijas Finieris. Arvīds Ozols, former Director General of the State Forest Service, pointed out that the discussion is perhaps not so much about the sector adapting to a new reality as about how to manage resources, including land, meaningfully in Latvia. “This is not a new discussion, but the paradox lies in the fact that Latvia has many different policies, yet no land policy; everyone understands the core values differently, and it is no surprise that in such conditions there has been no proper conversation between the various groups of understanding,” said A. Ozols. He points out that different value systems collide. “Looking at it from the point of view of the new conditions, the most popular perspective previously was certainly the climate one, and now it is the geopolitical situation (a war close by), yet on the land both natural and human-induced processes are under way that do not change, even though people’s attitudes and opinions do,” said A. Ozols. U. Biķis draws attention to the fact that a war is being waged in Latvia too, only in the form of hybrid warfare. “It is very easy to manipulate information, and where there are a great many opinions it is even easier, so the question is how to steer discussion and decision-making and improve political culture,” notes U. Biķis.

A crossroads of interests in three dimensions

Jānis Priede, Dean of the Faculty of Economics and Social Sciences at the University of Latvia, believes one has to take a much broader view. The State Chancellery, together with the University of Latvia, has begun work on the Latvia 2050 strategy. “When it comes to strategic resources, 2050 is not so very far away, because the longer view is measured in centuries,” said J. Priede. He notes that a conference held by the Saeima has already identified the so-called megatrends – climate change, which affects land management in various territories, technological development, demographic issues, and resource management and availability – all of which require attention.

“In the Latvian context we speak about the strategic importance of land resources over a 100–200 year horizon and about what value we are able to obtain from forestry, agriculture and other kinds of industrial land,” stresses J. Priede. He notes that one point of reference is what we in Latvia create today with the resources at our disposal; at the same time everyone has their own homework to do – for the forest sector, for example, there is the question of added value and of the technologies used, how much they are able to earn, and what society gains from this sphere. J. Priede stresses that the scenario method is very popular in research, and at the same time research does not tell anyone how to live, but shows, on the basis of various assumptions, how we handle resources and what results can be obtained. In this way policymakers are well informed about the possible choices.

“In science there is a concept known as a Pareto optimal situation, where none of the participants can improve their own position without worsening that of the other players, and in the context of forest resources there are three dimensions – the economic, the ecological and the social,” explains J. Priede. He recalls that this is no simple task, because public discussion has run into a channel where these groups do not talk to one another and each tries to present every dimension precisely through its negative side. That is, if economic interests prevail, the ecological question will be depleted, and conversely – if ecological interests prevail, we shall live in a beautiful nature park, but stagnation will set in. There have been attempts in Latvia to encourage a discussion between these three parties, and J. Priede hopes that all sides will begin to speak the same language, since ultimately what is at stake is the interest of society as a whole.

“Research shows that the forest is an important issue for society, with a strong emotional attachment, because it is also a recreational resource,” said J. Priede. It has to be understood what the options are that balance the interests of society – social and cultural – with the wish to live in prosperity. We can talk about more intensive forestry, which will at the same time also be more precise forestry, with selective breeding and purposefully managed processes, and which will generate greater prosperity, and that in turn is in society’s interests. J. Priede concludes that bringing together these groups of radically different views is a very serious challenge, but he hopes it will succeed. “There was an exercise carried out long ago that was called the minimum possible consensus – nobody is delighted with it, but all the interest groups are able to live with it,” notes A. Ozols. In his view there are several challenges, the most important of which is to understand that we must talk about goals rather than fight about the means. “Public arguments about what percentage we shall protect and under what regime – if that is taken as the goal, then it becomes a kind of end in itself, because there has to be some justification: we want particular natural values in a particular quantity. Another aspect is jobs, but to which group do we assign them – the social or the economic section, because a person can enjoy the benefits only if they have a sustainable job,” said A. Ozols. In his view, the discussion has turned into an argument about the means, in which everyone wants to guard their own sandpit and not let anyone else start working in it.

“If we talk about the economy, some say: if you manage things differently, you would lose nothing economically; others in turn insist: don’t talk to us about nature conservation, because this is our sandpit and we earn our money from it,” says A. Ozols, giving examples of the divisions between interest groups. In his view, a common starting point of understanding about jointly agreed goals is needed. “There are several goals, and the climate discussion, for example, adds fuel to the fire, because the most important thing is adaptation to the new conditions rather than what we can do to reduce this climate change, since geologically the climate on Earth has changed continuously, regardless of the presence and activity of human beings,” said A. Ozols. He points out that land management is essential both for food and for obtaining other benefits. J. Priede recalls that it is a primitive view of land use to ask what we can do and in which territory, whereas technologies change and forest management has changed too, which allows the forest to be more productive; at the same time the forest sector makes a large contribution to the whole national economy and to GDP, yet the sector’s export value could be higher. “Is there any state policy that allows (gives the opportunity to) entrepreneurs to be more ambitious and to produce (sell) goods with higher added value?” asks J. Priede. He acknowledges that what is at issue is innovation at every level.

Conditions encourage low added value

“The added value that is created can be divided into two parts – in one the responsibility lies with the forest landowner, in the other with those who process what has been grown in the forest,” notes U. Biķis. He points out that in the structure of forest ownership in Latvia there is one large owner – the state – but the question is whether the state itself understands the objective it wishes to achieve, how many new products and innovations the state-owned company develops, and what its investment policy is. U. Biķis recalls that lower added value lies closer to the forest owner, since they are already selling roundwood. “The question is: why do forest owners sell firewood? Because the principles of forestry in Latvia do not encourage the creation of high-quality roundwood (which is the basis for higher added-value production), since we harvest the crop according to other criteria (parameters) – according to a calendar schedule (reaching the felling age) rather than according to indicators of timber quality,” explains U. Biķis. He recalls that nature makes its own corrections and the quality of the timber obtained is by no means as good as it might be, with the result that high-grade timber, from which high-grade products can be made, is not obtained.

“Society has created conditions in which the quality of the timber obtained is low, but that is not the responsibility of the timber processors, whose task is to process the roundwood supplied to them, maximising the possibilities offered by the quality of that timber and manufacturing the corresponding products,” said U. Biķis. He points to another essential question: does the state have the instruments it ought to have in order to obtain the highest possible added value from the timber the market offers?

“There is a big problem with energy and its high prices, because if timber has to be ground or dissolved – if energy-intensive processes have to be carried out – then doing so in Latvia is very expensive, and that is why it happens in those countries where energy is cheaper,” stresses U. Biķis. He points out that Latvia and the whole of the Baltics is an expensive energy island and that, until we solve this issue, chemical processing of timber will not be possible here. Mechanical processing of timber, on the other hand, has developed very well throughout the Baltics, because there are very modern sawmills and panel factories. There could, in U. Biķis’s view, be more panel factories, but one has to bear in mind that they involve the chipping of timber, which is an energy-intensive process. “If forestry were to shift its objective towards the quality of the timber obtained, and the volume of lower-quality timber on the market were substantially smaller than it is at present, then perhaps Latvia would not need so many additional panel factories at all, because large factories are not built for five or ten or even 20 years of operation, but for at least 50–70 years. I believe that over 50 years forestry could produce half as much firewood if landowners were given the freedom to make decisions,” said U. Biķis.

In search of a state of balance

A. Ozols draws attention to the fact that a tree is not in itself a resource, because the resource is the land, which is the basic means of production on which one can grow a tree, grain and so on. “The second common trend in both forestry and agriculture is biological processes, which take place according to their own laws regardless of what people decide or lawmakers vote for; the question is whether these processes can be understood and the resulting knowledge used to our own benefit,” said A. Ozols. He recalls that the biological process in forestry is far longer than political processes.

“The regulations that apply to final felling are inherited from the USSR forest management instructions of the 1940s and 1950s, where the parameters were set according to the useful yield and the economic needs of the time, when the felling age was calculated backwards,” says A. Ozols. He recalls that a great deal has changed over these more than 70 years. “It is important not to confuse all these things, because when they are confused the felling age becomes the guarantor of biodiversity protection,” notes A. Ozols. He recalls that essentially one technological means is being confused with biodiversity goals. “With a broader view it is possible to find solutions that allow a state of balance to be achieved,” A. Ozols suggests. He recalls that society wants to achieve prosperity so that people feel good (so that they can relax), because not everyone is a forest owner; in that case it must be possible to assess not only primary but also secondary jobs, because these create social security. It must likewise be borne in mind that political commitments collide with biological processes and create a mismatch that leads on to inadequate solutions.

“Here I am thinking about the calculations made for the land sector and the failure to reach the targets. At the same time there is the question of where those targets came from, on what basis they were formed,” asks A. Ozols. U. Biķis believes that society in Latvia should be glad that most of the country’s territory is fertile land from which, without depleting it, we obtain a natural resource that is a precondition for production, and which in turn serves as the basis for high added-value services and products. “We have this opportunity; the only question is how we manage these processes, how we remove the relevant risks and communicate with society in order to gain confidence that in acting we do no harm. We ought to be discussing questions in forestry such as the use of chemistry, genetic engineering and so on, because in other countries of the world this is already happening,” said U. Biķis. He notes that forestry in Latvia works in a historical way, based on selective breeding and natural processes, which can be likened to organic agriculture, where a tractor appears more often than it does in the forest. In U. Biķis’s view, an obstinate refusal to talk allows everyone to understand one and the same definition differently, and the result is unnecessary arguments, even though we could achieve a good result on all the major goals. “Finland’s income from forest sector exports is 20%, which is the same as in Latvia, even though the level of pay is almost three times higher; that means work is needed for this land-based sector to be able to develop,” said U. Biķis. He points out that in the forest segment the Baltics is and will be an exporting region, and that means that not only the energy sector but also the logistics sector is and will be essential. “If society does not really want to build RaiBaltica because it is expensive, a very cumbersome process has been created; but the moment fuel becomes very expensive, we shall not be able to take the products we make anywhere far, and that is why a railway is needed, so that Latvia can deliver the goods it produces to Spain, for example,” said U. Biķis. He notes that cheap logistics is the guarantee of exports, and it is a bad thing if we are unable to explain that to society.

Political decisions

“I cannot find a scientific justification for the split – 70% for economic activity, 20% with restrictions and 10% under strict protection – and therefore it is a political decision at European Union level,” A. Ozols replies to the question of whether the 70:20:10 split is based on science and on data obtained from research. He hastens to add, however, that this split is neither bad nor unnecessary, because it gives something to hold on to. “There has been a discussion about how much is needed, with some saying: more is needed, and others, on the contrary, that it is too much, and so here are the percentages, now try working with them!” said A. Ozols. He does acknowledge, though, that there is a question about what we understand by 70%:30% (20%+10%), since in essence the 20% are those in which a specific management goal has been defined, unlike the 70%, while the 10% are those from which we drive people out and see how nature manages there. “It is essential to understand how we set goals and what means we choose,” said A. Ozols. In U. Biķis’s view, 70%:20%:10% is just as much a political decision as the age of timber, when it may be harvested and taken for processing. He notes, however, that this split makes analysis and comparison between EU member states easier and gives confidence that the same questions are viewed in the same way across the whole EU. “It is essentially an agreement to use a single ruler,” adds A. Ozols. J. Priede, for his part, recalls that EU member states differ greatly in their forest areas and in the share these make up of the country’s total territory. In his view, differing parameters raise the question of whether this is not grounds for a discussion in each member state about the conditions appropriate to it.

“70%:20%:10% is a flat surface, but in reality it is a surface of three or even four dimensions, and if we divide up this land, then we have an interest in food (the basis of processing) being grown on the most fertile land, followed by forestry, which is the basis for the timber industry, and then there are also roads and populated areas. Less productive land, on the other hand, should be given over more to nature-related matters, and so in Latvia we have to be able to build the appropriate network wisely, because as the climate changes, species move too,” notes U. Biķis. He recalls that a natural forest balances out at carbon neutrality and that the only way to increase carbon storage outside the forest is to use wood products.