State forest management models in the Baltics and Northern Europe are built on different institutional principles – the Baltic states use centralised models geared towards direct commercial profit, while the Nordic countries integrate broader public obligations and biodiversity directly into their business structures.

In Latvia, JSC Latvijas valsts meži (LVM) operates as a state joint-stock company with a distinctly commercial focus, managing both forestry operations and infrastructure, and generating a high level of dividends for the state budget. In Estonia – RMK – the company is a public-law entity acting as a state competence centre, combining commercial activity with more pronounced direct funding of public recreation and nature conservation functions. Finland's Metsähallitus was, meanwhile, set up as a unique hybrid model. The state enterprise is split into a commercial structure, covering both forestry and real estate management, and a public sector arm that manages national parks and nature conservation, receiving separate state budget funding. Sweden's Sveaskog is a state forest company that operates as a pure market player, but has strictly defined state targets on biodiversity, setting aside a significant share of its area for nature conservation under so-called ecological forest management.

What are the revenues?

The financial performance of forestry companies in the Baltics and the Nordics was, overall, positively affected by high roundwood market prices in 2024 and 2025, despite a decline in sales volumes. Below is a summary of the total revenue – turnover – of state forest companies, and their calculated revenue per capita:

Latvia's high per-capita figure is explained by the fact that LVM manages a comparatively larger share of state-owned forest – around 50% of the country's forests, while private forest owners dominate in Sweden and Finland, with state companies managing a smaller share of the total market.

Logging and timber in the Baltics and the Nordics

Annual logging volumes clearly show the scale of economic activity relative to the size of the country and the scale of the companies.

In Latvia, sales volumes remain stable at between 5.5 and 6.0 million cubic metres of roundwood assortments per year – an average of around 1.66 million m³ per quarter. The volume is strictly regulated by the government-approved maximum allowable cut for a 5-year period. Estonia's RMK volume ranges from around 3.8 to 4.2 million cubic metres per year. In recent years, the Estonian government has significantly reduced RMK's state logging volumes due to pressure from environmental activists, in order to avoid conflicts with environmental organisations and part of the public.

Finland's Metsähallitus logs around 6.0 to 6.5 million cubic metres per year in state forests. It should be noted here that Finland's total volume, including private forests, exceeds 70 million m³ per year. Sweden's state forest company Sveaskog harvests approximately 10.5 to 11.5 million cubic metres of timber per year. As in Finland, this is only a small share of the country's total market, since most forests are owned by private individuals and corporations. In the timber market, 2025 and 2026 have seen prices stabilise after the sharp fluctuations of previous years.

The Nordic and Baltic roundwood markets are closely integrated, as demonstrated by the pricing mechanisms used by LVM, which draw on average figures across the region's countries – Latvia, Lithuania, Estonia, Finland, Sweden and Norway – taken together. Differences between regions are determined by local factors and logistics.

Prices in the Baltics can, however, also be higher than in the Nordics for a number of reasons. One is the local shortage of raw material. The Baltic states have very well-developed wood processing and pellet production capacity, which often exceeds the volume of timber supplied by local state forest logging. The Nordic cooperative structure also has an effect, since in Sweden and Finland the huge forest owner cooperatives, such as Södra or Metsäliitto, have long-term supply contracts with their own mills. This shields their domestic market from sharp fluctuations in exchange prices. Import and logistics costs are also significant. Since the Baltic Sea serves as a direct logistics route for timber flows to Scandinavian pulp mills, prices in Baltic ports and coastal regions are kept at a level competitive with those in Scandinavia.

Problems and challenges in the Baltic Sea region

Across the region, damage from bark beetles, particularly the eight-toothed European spruce bark beetle, is increasing, together with storms and forest fire risks, forcing sanitary felling and reducing the planned quality of timber. A significant problem is the pressure of EU-set regulation. The Nature Restoration Regulation and stricter biodiversity requirements, such as the preservation of old-growth stands, noticeably limit the area available for economic activity. This, of course, increases logging costs by as much as 15-18%. Conflicts of interest have built up in society, and this has a major impact on the development and competitiveness of the sector. In the Baltic states, especially Latvia, there is a marked gap between the public's desire for nature conservation and state institutions' focus on maximising profit for the budget. There are, undeniably, also certification and market risks. A downturn in export markets in the European construction sector is holding back overall demand, although the local energy wood market remains volatile.

What can we conclude?

There is a so-called efficiency paradox at work, whereby the Baltic states' forest management models – LVM in particular – perform more efficiently in per-capita monetary terms than their Nordic counterparts, thanks to centralisation and intensive management. The Nordic countries – Finland, Sweden – have gone further in integrating ecosystem services and biodiversity into the state forest balance sheet, even if this reduces direct profit in the short term. It is already clear that the Baltic Sea region will face a resource shortfall in future. Growing logging restrictions due to nature conservation mean that forestry companies will no longer be able to grow revenue through volume alone, and will instead have to rely on innovation and higher value-added timber products.

What does the near future hold?

State forest managers are already investing in technologies that allow timber to be used in the production of textiles, bioplastics and high value-added building materials, replacing fossil resources. Renewable energy projects also play a significant role in the management of forest land. LVM, Metsähallitus and Sveaskog are actively developing wind and solar park projects on state forest land, which will become a new source of revenue independent of timber prices. Carbon credit markets will also develop. State forests will be managed so as to maximise CO₂ sequestration, earning financial compensation or certificates on international markets in return. Ecosystem service accounting is being developed. Future balance sheets will include not only the value of timber, but also the water filtration, soil protection and public health benefits provided by forests – as Estonia's state forests are already implementing, and which is enshrined in their strategy through to 2028.

Nature conservation restrictions in the region

The share of nature conservation areas in state forest companies has a significant effect on commercial capacity. These percentages reflect the land areas where economic activity is either fully prohibited or heavily restricted:

In Latvia, 26.13% of the total area managed by LVM – 0.42 million hectares – was managed in 2024/2025 with one primary objective – nature conservation. Economic activity for the production of high-value timber is permitted on 74.7% of the area. At the national level as a whole, including private forests, strict restrictions apply to around 13.3%. In Estonia, approximately 30% of the forests managed by RMK are subject to strict protection, where logging is prohibited. This is the highest figure in the Baltics. Variable restrictions, such as a quiet period during bird nesting season, apply to the rest.

Sweden: at Sveaskog 26% of the company's total land area is fully excluded from forestry operations. This includes both eco-parks and voluntarily set-aside conservation habitats. Approximately 13% of all forests managed by Finland's Metsähallitus are protected, most of them in the north. In the company's commercial arm – Forestry Ltd – logging is fully prohibited in nature reserves, which cover around 10% of the country's total forest area.

It should be emphasised that the EU Nature Restoration Regulation and the European Union's Biodiversity Strategy pose significant long-term challenges for the economies of the Nordic and Baltic states. Their goal is to introduce restoration measures on at least 20% of the European Union's land area by 2030, and by 2050 – in all degraded ecosystems. There will undoubtedly be a shortage of timber resources. Full implementation of the regulation and strict protection of all so-called old-growth and primeval forests could remove as much as 1.6 million hectares of productive forest in the Baltic Sea region from economic use. This would mean a reduction in timber harvesting of approximately 8 million cubic metres per year.

To soften the blow for Nordic and Baltic forest owners and state companies, new payment models for ecosystem services and nature credit systems are currently being developed. Under these, payment would be made not for cubic metres harvested, but for biodiversity preserved

Studies conducted in the European Union show that a reduction of approximately 25 million m³ in logging volumes in Europe will result in two-thirds of that volume being imported and logged in third countries .

Legal frameworks for wind park development in state forests

The integration of renewable energy on Nordic and Baltic state forest land is currently undergoing rapid legal and political development.

In Latvia, the legal basis is Cabinet of Ministers Regulation No. 350, which sets out the procedure for granting building rights on publicly owned land for the installation of wind park units. LVM holds public auctions for building rights. Initially, large areas were allocated for exploration – for example, more than 44,000 ha were allocated in the 2023 auctions. In May 2025, the Minister for Agriculture instructed that the signing of new contracts for wind park development be halted. The reason given was the need for a more transparent public dialogue and clearer conditions for local municipalities.

In the Nordic countries, regulation is less centralised and focuses more on municipal veto rights and regional planning. In Sweden, Sveaskog acts as a landlord leasing land to commercial wind park developers. Sveaskog does not install turbines itself, but earns steady rental income. Swedish legislation has required a strict compensation system for local communities and respect for the interests of traditional Sami reindeer-herding grazing areas. Finland's model is considered the most successful in the region. The state company Metsähallitus has the right to carry out wind park zoning and initial development itself – licensing, environmental impact assessment – and then hand finished projects over to investors, ensuring maximum benefit for the state.