Nature census takers in Latvia have found more than 300,000 hectares of habitats of European importance, and as these are mostly located in forests that have reached felling age (around 450,000 hectares in commercially valuable species in managed forests), the amount of area potentially removed from economic use could range from 60,000 to 260,000 hectares, which will leave a significant impact not only on specific companies but also on the industry and related sectors, and the Latvian economy as a whole.

This picture is shown by a discussion jointly organised by Dienas Bizness and the portal zemeunvalsts.lv regarding the potential impact of the so-called “nature census” results on the forest industry, the economy, and jobs in the regions.

The figures are in, there is still much that is unknown

“The results of the ‘nature census’ are known and were made public at the supervisory group meeting. They show that habitats of European importance have been found in Latvia covering more than 300,000 hectares. At present, it is not known what will happen next,” states Arnis Muižnieks, Chairman of the Board of the Forest Owners Association of Latvia (LMĪB). He emphasises that forest owners approached the Ministry of Environmental Protection and Regional Development (VARAM) as early as 2017 (before the “nature census” began), asking: “What will happen once the natural values have been counted?” “The response from the ministry leadership at the time—‘Let us get the data first, then we will talk about what happens next’—was not and is not correct, because uncertainty in no way helps to achieve nature conservation goals,” stresses A. Muižnieks. Forest owners had anticipated the potential consequences from the beginning. “The draft information report in preparation suggests that these areas will be included in some category of protection, but how many such areas there are (or will be) and where they will be located is currently unknown,” responds A. Muižnieks to a question about the possible removal of forest areas from economic use. He does, however, admit that the experience of recent years in establishing micro-reserves leads one to believe that economic activity will be completely banned in the territories where habitats of European importance have been found.

The industry could be “crushed”

“It is too early to name specific numbers because it is not clear how much, and in what form, the restriction of economic activity will take place. As mentioned before, the draft information report is still in the development stage (it must be reviewed by the Cabinet of Ministers by the end of 2021). This report should include various action scenarios,” notes Kristaps Klauss, Executive Director of the Latvian Forest Industry Federation. He has no doubt that the main task of the “nature census” was to determine the status and number of habitats of European importance in Latvia and to protect them in Natura 2000 territories. “Since the European Commission has launched an infringement procedure against Latvia in connection with habitats of European importance, it will inevitably be necessary to reach the level required by the European Union. There is no doubt that Natura 2000 areas will increase by at least 60,000 hectares,” explains K. Klauss. In his view, the amount of area potentially removed from economic use could range from 60,000 to 260,000 hectares. “A portion of the habitats of European importance has been found in protected nature areas, but the ‘newly’ found 260,000 hectares do not have a set protection status,” replies K. Klauss to a question about why 260,000 hectares are being discussed when nature census takers have found habitats covering more than 300,000 hectares. Although 260,000 hectares is not even 10% of Latvia’s total forest area of 3.2 million hectares, Latvia cannot afford it. “Specifically, the timber industry obtains wood from forests that have reached felling age, and nearly 99% of habitats of European importance are also located (found) in stands that have reached felling age. According to State Forest Service data, the area of managed forests that have reached felling age (excluding grey alder stands) is around 450,000 hectares, and any amount of newly found European habitats, whether 60,000 hectares or, even more so, 260,000 hectares, will significantly affect wood processing,” explains K. Klauss. He admits that the industry would certainly feel the removal of 60,000 hectares from economic use, but that would not yet be a reason to sound the alarm. “But if 260,000 hectares are removed from the 450,000 hectares currently in economic circulation (i.e., wood cannot be economically harvested), that will trigger huge structural changes in employment, the number of companies, their competitiveness, and—undoubtedly—the entire national economy. In such a situation, Latvia’s currently largest manufacturing industry would be crushed,” predicts K. Klauss.

There is no socio-economic assessment

“The Ozols database of the Nature Conservation Agency contains 649,000 hectares, of which 331,000 hectares are forest habitats of European importance, which is why the draft report from VARAM contains the following proposal: until the completion of the Natura 2000 network improvement, declare a moratorium on any activity in the aforementioned 331,000 hectares and remove them from economic use for an unknown period,” describes Māris Liopa, Chairman of the Forest Certification Council of Latvia, regarding the situation. In his view, such a solution will have a significant impact on the industry, which is the backbone of the Latvian economy, especially since such a step has no socio-economic assessment. “The number of micro-reserves is growing every year, and I have not heard of cases where (the micro-reserve status) was lifted for any area,” explains M. Liopa. In his view, existing compensation—160 euros per year per hectare where economic activity is completely banned—is ridiculous. “If there is a serious risk that the volume of available timber in Latvia will decrease, what kind of national development can we talk about, and who would want to take the risk and invest in the industry?” asks M. Liopa.

The blade of compensation

K. Klauss explains that the approximate breakdown of the found habitats of European importance is known: 80% in forests belonging to the Latvian state, 10% in public (municipal) forests, and 10% in private property. “The draft information report contains a proposal: to avoid paying compensation to private forest owners, protected areas should primarily be established in forests belonging to the state and municipalities. Even though in any scenario the majority of protected areas will be created in state-owned forests, such a proposal shows how far the authors of the report are from understanding economic processes—foregone revenue or incurred expenses are one and the same. It is strange: to replace compensation for a private forest owner, the source of which is the EU budget, with unreceived dividends,” says K. Klauss. A. Muižnieks reminds us that habitats of European importance in Latvia have been found most often in old-growth boreal forests that people planted 80–100 years ago and have maintained accordingly. “If a smaller number of habitats have been found in private forests, upon arriving at a specific property, the owner has serious and justified concerns about what will happen to their land,” stresses A. Muižnieks. He predicts that the situation will be similar to that with micro-reserves, where a forest owner has planned on income expected for things like the schooling of children or grandchildren or to address health problems, but in the end, cannot accomplish any of what was intended. “This is a very bad example of how to organise nature conservation in Latvia, because the process has not given owners any confidence that they will be listened to, heard, understood, or involved. Real nature conservation happens in the forest—on a specific property, and no one else will protect nature—only the owner themselves,” says A. Muižnieks. He points out that, based on the “nature census” results, it is not clear what protection regime will be applied in each specific case. “Forest owners’ trust in the nature conservation system is not increasing, but decreasing,” concludes A. Muižnieks.

K. Klauss emphasises that it is not the payment of compensation to forest owners that will determine whether Latvia’s prosperity grows or not. “As long as a tree grows in the forest, it brings no prosperity. It is created when the tree is felled and processed, because the difference between the value growing in the forest and the industrial wood product we export is currently six times on average, and in the coming decade, by continuing to deepen processing, the goal is to reach 12 times. Regional employment must also be taken into account,” explains K. Klauss. Further processing of wood is essentially the pillar of regional development. “Yes, we can compensate the forest owner for unsold cubic metres of wood, but there is no compensation mechanism for those who process this wood. The volume of wood for processors will shrink or disappear entirely, which will mean the liquidation of companies and an increase in unemployment. It is endlessly naive and wrong to hope that those working in wood processing will retrain as IT specialists,” says K. Klauss. In his view, it is also difficult to talk about wood imports from the east. “Belarus has ‘closed’ roundwood exports with export duties, Ukraine has done the same, and Russia has also closed its borders to wood exports,” responds K. Klauss to the question about the possibilities of importing the missing wood from the east. He explains that there is significant wood import from both Lithuania and Norway, but it will not be possible to significantly increase wood volumes from these countries. “Economic decline will not start merely by banning an owner’s economic activity in the forest,” says K. Klauss. A particularly unpleasant situation could develop in Vidzeme, where every fifth worker is involved in the forest industry. “This is very serious, and adding in the transport of wood and its products and various other service providers who will feel a lack of buyers for their services or goods, the problem will exceed one—the forest—industry. In reality, there will be less money in the regions, so very balanced and well-founded decisions must be made,” stresses K. Klauss.

Assessment necessary

M. Liopa draws attention to the fact that the EU's new policy is focused on the use of renewable resources, but by imposing bans, Latvia’s opportunity to use these resources is being reduced, limiting one of the most important factors for employment in the regions. “There is neither an assessment of socio-economic impact (changes in the number of jobs in the industry and related sectors, tax revenue, population) nor an assessment in the context of climate neutrality (in relation to CO2 emission absorption), especially if, according to data from the Latvian State Forest Research Institute ‘Silava’, about 65 million m3 of wood is rotting in the country,” explains M. Liopa. “The nature conservation system in Latvia must exist, but it cannot be based solely and exclusively on new bans without involving forest owners in the process, as is done, for example, in Scandinavian countries, where the owner signs a contract with the state for a certain period (10 or 20 years) and commits to doing or not doing something on their property,” suggests A. Muižnieks. He points out that the premise—that nature can be protected by doing nothing—is fundamentally wrong and flawed, because seasonal restrictions or other management methods could just as easily be observed in areas with a concentration of protected species or habitats. There are cases where a protected species disappears if a person does not manage the land, similar to what can be seen with the overgrowth of coastal heathland habitats or capercaillie leks. “The draft information report from VARAM contains indications that areas are being restricted and will be placed in some protected category, but how many such areas there are and where they will be located is currently unknown,” stresses Arnis Muižnieks.
Information
41,000 people (directly) employed in the forest industry (2020)
Export income of 2.59 billion euros (2020)
The video of the discussion is available here:
https://www.youtube.com/watch?v=MrBYyuf0B_M