Forest Policy and Economics xxx (2014) xxx–xxx

FORPOL-01181; No of Pages 10

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Forest Policy and Economics

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Policy coherence in climate change mitigation: An ecosystem serviceapproach to forests as carbon sinks and bioenergy sources

Marika Makkonen a,b,⁎, Suvi Huttunen a, Eeva Primmer a, Anna Repo a, Mikael Hildén a

a Finnish Environment Institute, P.O. Box 140, 00251 Helsinki, Finlandb Finnish Forest Research Institute (Metla), P.O. Box 18, 01301 Vantaa, Finland

⁎ Corresponding author. Tel.: +358 2 9532 3337.E-mail address: marika.makkonen@metla.fi (M. Makk

http://dx.doi.org/10.1016/j.forpol.2014.09.0031389-9341/© 2014 Elsevier B.V. All rights reserved.

Please cite this article as: Makkonen,M., et alsinks and bioenergy sources, Forest Policy an

a b s t r a c t

a r t i c l e i n f o

Article history:Received 13 December 2013Received in revised form 20 August 2014Accepted 3 September 2014Available online xxxx

Keywords:Ecosystem servicesClimate change mitigationForestCarbon sequestrationBioenergyPolicy coherence

Policies governing forest ecosystems canmitigate climate change inmanyways,makinguse of various ecosystemservices. Although identification of ecosystem service trade-offs has received increasing analytical attention, thepolicies and mixes of policies generating the trade-offs have remained outside the focus. To advance the policyrelevance of ecosystem service trade-off analysis, we analyse the coherence of Finnish policies affecting forestbioenergy and carbon sequestration, two contrasting means to use forests for climate change mitigation. In par-ticular, we focus on the interactions that different policy outputs have with respect to these two ecosystem ser-vices. The analysed policy outputs represent different foci and levels and rely on different mechanisms. Weidentify the direct and indirect impacts that the policy outputs have on the supply and demand of the servicesby utilizing natural science and policy assessment approaches. We find forest bioenergy, representing a tangibleecosystem service exchanged in the market, to be governed more positively and with more explicit instrumentscompared to carbon sequestration. Carbon sequestration policies remain at a higher level of abstraction, statingmerely strategic objectives, possibly because these markets are only emerging and remain political and highlyuncertain. Our analysis shows that trade-offs between the two ecosystem services are generated by policiessupporting bioenergy, whilst general policies advance both services. The entire mix of policy outputs and its dif-ferentiated impacts on ecosystem services should be thoroughly considered when assessing the strategies formitigating climate change and designing new policy instruments.

© 2014 Elsevier B.V. All rights reserved.

1. Introduction

Ecosystem services have been suggested as an important way toframe complex socio-ecological problems and governance challenges(Carpenter et al., 2009). The ecosystem service approach stresses thefunctions of the ecosystems and the benefits people derive from them(Daily, 1997; MA, 2005). One of the main expectations placed on theecosystem service concept is that it could support decision makingand governance of the entire range of assets in nature, which humansuse and depend on (Norgaard, 2008; Daily et al., 2009; TEEB, 2009;Potschin and Haines-Young, 2011). The social, economic, and ecologicalaspects of these assets would be weighed against each other when de-signing policies and evaluating their impacts. However, the degree towhich ecosystem services have been addressed in policies varies, andpolicies address different services in different ways (Primmer andFurman, 2012; Hauck et al., 2013). A general postulate is that thoseservices that have market value are duly recognised, whilst thoseservices that are not exchanged in the market must be given a valueto be weighed properly in decision-making (e.g., Fisher et al., 2009).

onen).

., Policy coherence in climated Economics (2014), http://d

Policies can integrate these values to safeguard those ecosystem func-tions and services that remain outside the market. These assumptionshave not been rigorously tested in real world policy settings, let alonein contexts where multiple policies interact. Greater understanding ofhow policies that already are in place influence ecosystem services isrequired for developing policies in a coherent way.

Especially trade-offs in ecosystem service provision pose a challengefor governance because they create a need to make choices (Rodriguezet al., 2006). In general, increasing use of provisioning services, whichoften have market value, is prone to conflict with enhancing orsafeguarding the less tangible supporting, regulating and culturalservices (Tilman et al., 2002; Rodriguez et al., 2006; Martín-Lópezet al., 2012; Hauck et al., 2013). However, trade-offs between ecosystemservices are often unintentional and not generated by deliberategoverning (Rodriguez et al., 2006; Hauck et al., 2013). Often, thedemand to acknowledge the trade-offs at the policy level is triggeredonly after the policy generates unintentional negative consequencesfor some ecosystem services (Hauck et al., 2013). The apparent incoher-ence of policies is identified through these indirect impacts.

Policy incoherence or coherence has been addressed in forest andenvironmental policy mainly outside the ecosystem service frameworkand its trade-off analyses (Howlett and Rayner, 2007; Mickwitz et al.,

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2 M. Makkonen et al. / Forest Policy and Economics xxx (2014) xxx–xxx

2009; Nilsson et al., 2012). Analyses of the interaction of multiple envi-ronmental policies have also addressed policy integration (Lenschow,2002; Kivimaa and Mickwitz, 2006; Jordan and Lenschow, 2010) andpolicy interplay (Young, 2002; Urwin and Jordan, 2008). Policy coher-ence analysis, which deals directly with the compatibility of policies, isparticularly suitable for analysing the entire chain, frompolicy objectivesto impact (Nilsson et al., 2012). Policy coherence analysis is, moreover,used for analysing the ability of different policies to provide actors withcoherent signals of desirable behaviour (Mickwitz et al., 2009). Thereforethe policy coherence approach is suitable for analysing how policiescontribute to the simultaneous maintenance of different ecosystemservices.

Climate change mitigation presents an important area to investigatepolicy coherence in relation to ecosystem services, and forest ecosystemservices in particular. The use of wood for energy production and themanagement of forests for carbon sequestration both rely on the func-tions of forested ecosystems; however, potentially resulting in trade-offs (Obersteiner et al., 2010; Mitchell et al., 2012; Vanhala et al.,2013). These ecosystem services contribute to climate changemitigationthrough different mechanisms and with very different consequences.Forest carbon sequestration absorbs CO2 from the atmosphere andstores it in the forest carbon pools, i.e. biomass and forest soil, whilstwood-based energy production can be used to substitute fossil energyand consequently reduce greenhouse gas (GHG) emissions. Whetherwoody biomass should be harvested and combusted in order to produceenergy or, whether it should be left in the forest in order to increase car-bon stocks in standing biomass and soil, poses a fundamental trade-offbetween these two services. However, the services can also be seen tobe synergistic as the same forests are envisioned to provide both ofthese ecosystem services to mitigate climate change: “In the long term,a sustainable forest management strategy aimed at maintaining or in-creasing forest carbon stocks, whilst producing an annual sustainedyield of timber, fiber, or energy from the forest, will generate the largestsustained mitigation benefit” (Nabuurs et al., 2007. p. 453). Thus,policies promoting these climate change mitigation strategies face thechallenge of weighing trade-offs and searching for synergies.

In this article, we present an interdisciplinary coherence analysisassessing the (likely) direct and indirect effects that the policy outputshave on demand and supply of forest bioenergy production and carbonsequestration. Most ecosystem studies do not combine analyses ofsupply (provision) and demand (use) although a chain from the ecosys-tem service provisioning to the service user can be traced in the ecosys-tem service approach (Ruhl et al., 2007; Potschin and Haines-Young,2011). As mapping analyses have highlighted the need for producingknowledge of the production functions and the processes of societaluse (van Jaarsveld et al., 2005; McDonald, 2009; Paetzold et al., 2010;Burkhard et al., 2012; Kroll et al., 2012), our study explicitly recognisesthe distinction of provision and use.We,moreover, seek to decrease thegap between governance and ecosystem service analyses by examiningthe effects that policies have on the ecosystem services, and by identify-ing the possible coherence problems. The possible coherence problemsare examined by identifying trade-offs that are generated or aggravatedby policies. This leads to three research questions: 1) Do specific policyoutputs strengthen bioenergy production, which is a tangible servicewith established markets, more than carbon sequestration, which isan abstract servicewith less clearmarket-value, 2)Which of the specificpolicy outputs create trade-offs between the climate mitigating forestecosystem services and which simultaneously support both services,and 3) Is the ecosystem service concept useful for analysing policy out-puts and their coherence.

We analyse forest related policies in Finland, where per capita GHGemissions are among the highest of the European Union member states(EEA, 2013). Finland's forest policies illustrate the tensions in the gover-nance of forests for climate change mitigation in an interesting context,as forests have traditionally had high socio-economic significance.Three quarters of Finland's land surface is covered with forests with

Please cite this article as: Makkonen,M., et al., Policy coherence in climatesinks and bioenergy sources, Forest Policy and Economics (2014), http://d

more than half of this forest area being privately owned (FinnishForest Research Institute, 2012). Forest policies have earlier promotedtimber growth and removals, subsuming other goals (Hyytiäinen andTahvonen, 2001; Ollonqvist, 2001; Primmer and Kyllönen, 2006;Kotilainen and Rytteri, 2011; Saarikoski et al., 2012). In line with globalandEuropeanpolicy development, the national forest and energy policieshave been recently reformed to adopt the goal of climate change mitiga-tion (e.g. Ministry of Agriculture and Forestry, 2010; Ministry ofEmployment and the Economy, 2011). The coherence of the resultingmix of policies is a major point of interest in examining how trade-offsbetween ecosystem services can be balanced.

2. Materials and methods

2.1. Definitions

In this studywe focus on two forest ecosystem services thatmitigateclimate change, are recognised by policies and for which there is actualdemand, i.e., they are currently used by humans. For carbon sinks thisdefinition requires temporal operationalization. Generally the time-scales needed for carbon sequestration assessments are long (decades,even centuries) due to slow changes in the carbon storages. In thisstudy, the carbon sink is specified by the Kyoto treaty and its changesare evaluated over a timescale of less than 10 years. We have separatedthe supply and demand sides of ecosystem services by taking the defini-tions given by Burkhard et al. (2012) as a starting point: The demand forecosystem service is the actual or potential usage or consumption of theservice in a particular area over a given time period, and the supply ofecosystem service is the capacity of a particular area to provide theservice. More specifically, in this study we have considered the border-line between supply and demand from a policy point of view. Thus thepolicies affecting forest owners were considered to affect the supplyand the policies affecting all other actors further down the value chain(e.g. power plants, industry, consumers) were considered to affect thedemand.

Policy coherence is understood as an ability of policies to providetarget groups with non-conflicting signals related to desired action(Mickwitz et al., 2009). Coherent policies thus succeed in reducing con-flicts and promoting synergies between and within different policyareas (Nilsson et al., 2012). As there is a general agreement to promoteboth bioenergy and carbon sequestration, a coherent policy would con-sider both of these aims in a balanced manner and would make the po-tential trade-offs explicit. The signals in this study were examined bypolicy outputs, i.e. objectives and instruments defined in acts and policyprogrammes (Nilsson et al., 2012). The policy objectives and instru-ments cover policy components from objectives to mechanisms/toolsaccording to the classifications by Howlett and Cashore (2009) andDupuis and Biesbroek (2013). A policy can include one or several out-puts and the policies that were selected for our study were assessed atthe level of objectives such as strategic aims aswell asfine-tuned instru-ments such as subsidies or obligations. For the purpose of this study, itwas unfeasible to refine the classification of policy components beyondobjectives and instruments.

2.2. Materials and analysis

The material we analysed included policies that govern forestbioenergy and/or carbon sinks or the use of forests in general. Thusthe overall policy areas we examined were related to forestry, energyand climate, and land use and nature conservation. The analysed poli-cies were national, including those that implement EU policies and in-ternational treaties. In addition to the contemporary policies in forceat the time of writing this paper, we also included all the policies thatwere in preparation at either the ministerial or the governmental level(Table 1). From the policies we identified the specific outputs, whichhave relevance regarding one or both of the ecosystem services. The

changemitigation: An ecosystem service approach to forests as carbonx.doi.org/10.1016/j.forpol.2014.09.003

Table 1National and international policies that influence the assessed ecosystem services. The policy sector that governs the policy is given to all national policies. The abbreviations of the sectorstand for Ministries of Agriculture and Forestry (MAF), Environment (ME), Employment and the Economy (MEE), Finance (MF) and full government (FG).

Policy area and reference Policy Sector

ForestryActs

263/1991c Act on the Prevention of Insect and Fungi Damages in Forests MAF1093/1996 Forest Act MAF1094/1996 Act on the Financing of Sustainable Forestry MAF

Act Not in Force (ANF) but passed and approved100/2011 Amended Act on the Financing of Sustainable Forestry MAF101/2011 Act on Energy Support for Low-grade Timber MAF

National strategies and programmesMAF 2010 Finland's National Forest Programme 2015 (2010) MAF

Planned Act Amendments (PAA) at the ministry levelPAA 2012-1 Draught (8.2.2013) for the Government Bill for Amending Acts

1093/1996 and 39/1889MAF

PAA 2012-2 Draught (8.3.2013) for the Government bill for enacting an Act onthe Prevention of Forest Damages and Repeal the Act 263/1991

MAF

Government Decrees (Decree)578/2012 Government Decree on the targeting of the farm investment subsidies in 2013 MAF

Energy and climateActs

1472/1994c Act on Excise Tax on Liquid Fuels MF1260/1996c Act on Excise Tax on Electricity and Certain Fuels MF446/2007c Act on the promotion of the use of biofuels for transport MEE1396/2010 The Act on Production Subsidy for Electricity Produced from Renewable Energy Sources MEE311/2011a Emissions Trading Act MEE393/2013a Act on Biofuels and Bioliquids MEE

Government bill (Bill) for amending Acts91/2012c Government Bill for Amending Acts 1260/1996 and 1472/1994 MF

National Strategies and programmesFG 2009 Government Foresight Report on Long-term Climate and Energy Policy: Towards a

Low-carbon FinlandFG

MEE 2011a National Renewable Energy Action Plan (NREAP) 2011 MEEFG 2013c Long-term Climate and Energy Strategy, Government Report to Parliament 20 March 2013 FG

Government Decrees (Decree)128/2006 Government Decree for Buildings' Renovation, Energy And health Problem Subsidies ME1313/2007 Government Decree on the Common Terms of Granting Energy Subsidies MEE

International treatiesKyoto 1

13/2005Kyoto protocol first commitment period 1997 FG

Kyoto 2 Kyoto protocol second commitment period 2012 FG

Land use and nature conservationActs

62/1991 Wilderness Act ME1096/1996b Nature Conservation Act ME132/1999c Land Use and Building Act ME105/2009 Game Animal Damages Act MAF

Government resolutionsME 2008b Government resolution for the Forest Biodiversity Programme METSO

2008–2016 (2008)ME

a National policy measure, which is created to implement the EC directives.b National policy measure, which partly implements EC/EEC directives.c National policy measure, which adapts to EC/EEC directives.

1 Forest bioenergy is termed as wood energy in Finnish policies.

3M. Makkonen et al. / Forest Policy and Economics xxx (2014) xxx–xxx

policy outputs were assessed by going through their effects on the eco-system services. We identified the mechanisms by which these policyoutputs may impact the demand or supply of forest bioenergy and/orcarbon sinks. The impacts were assessed by reviewing scientific litera-ture. The review allowedus tomake qualitative conclusions on the direc-tion of the impacts. To ensure validity, we focused mainly on studiesassessing the Finnish boreal forests.

The impacts on both of the ecosystem services were assessed sepa-rately and classified into four classes: 1) strengthening (increasing ormaintaining), 2) weakening (decreasing), 3) simultaneously strength-ening and weakening or 4) unknown. In addition, the impacts wereclassified as direct when the assessed ecosystem service was explicitlyrecognised in the assessed policies and indirect otherwise. Afterreviewing the literature, policy coherence was assessed by examininginteractions that the policy outputs generated between the two ecosys-tem services. The interactions were grouped into three categories: mu-tual benefit (++), trade-off (+/−) and mutual loss (−−) following

Please cite this article as: Makkonen,M., et al., Policy coherence in climatesinks and bioenergy sources, Forest Policy and Economics (2014), http://d

Bennett et al. (2009) andHaase et al. (2012). The framework underlyingthe analysis is further explained in Fig. 1. Examining all the identifiedinteractions together allowed us to provide an overall assessment ofthe policy coherence.

2.3. The resource supply and demand chains of the studiedecosystem services

The impacts of the policy outputs were recorded along the resourcesupply and demand chains in order to locate the coherence problemsand solutions. The resource supply chains of the strongly interlinkedecosystem services are illustrated in Fig. 2 and their operationalizationin Finland is briefly explained here. Resources for forest bioenergy1 aremainly retrieved either directly from the forest or indirectly via forest

changemitigation: An ecosystem service approach to forests as carbonx.doi.org/10.1016/j.forpol.2014.09.003

Ecosystem service A

Demand

Supply

Policies affecting climatechange mitigation

+–

+ +

+ –

– +

– –

– Ecosystem service A

Eco

syst

emse

rvic

e B

+

Ecosystem service B

Demand

Supply?

Fig. 1. Illustration of the concepts used in this study. The bend arrows are the policy instru-ments and the enlarged box in the middle illustrates the interactions that the policyinstruments generate between the two ecosystem services that we assessed. In this box,mutual benefit (++) is given in green, trade-off (+− or −+) in yellow and mutualloss (−−) in red. (For interpretation of the references to colour in this figure legend,the reader is referred to the web version of this article.)

4 M. Makkonen et al. / Forest Policy and Economics xxx (2014) xxx–xxx

industry (secondary residues) (Röser et al., 2008). These resource flowsare strongly interlinked and usually harvested simultaneously. Theprovision of forest bioenergy in the form of wood chips, which mainlycomprises of primary residues (wood not qualified for the industrialuse e.g. residues from thinning and final cuttings) is rapidly increasingas the wood chips are used in heat or combined heat and power plants(Finnish Forest Research Institute, 2012). Still, more than half of all

Wood energy

Side and waste products

Biofuels

Wood chips

FuelwoodBiomass removal

Industry

Woo

Logs & pulpwood

Forest area

Climate change

Fig. 2. A diagram of the flow of forest resources (land area, wood and carbon) into forest bioenepools accounted in the carbon sink assessment only during the secondKyoto protocol commitmaffecting either the supply or the demand of the services that are listed in Tables 2 and 3. The coefit, trade-off ormutual loss to the assessed ecosystem services (see Fig. 1 for explanation). (Forweb version of this article.)

Please cite this article as: Makkonen,M., et al., Policy coherence in climatesinks and bioenergy sources, Forest Policy and Economics (2014), http://d

forest bioenergy is retrieved from secondary residues (e.g. black liquor,bark, sawdust and industrial chips). Wood that is mainly used in smallhouses as chopped firewood is called fuelwood. Resources for refinedbiofuels can theoretically come from all sources but the production ofwood-based biofuels is currently only commencing (Hämäläinenet al., 2011). The demand for the use of wood as an energy resourcehas been recognised ever since the first national Energy strategy in1979 (Helynen, 2004). Current policies related to forest bioenergy arenumerous as this service is considered to conduce to reducing GHGemissions in energy production, creating employment and securingenergy supply by the self-sufficient energy production (Kivimaa andMickwitz, 2011).

Unlike forest bioenergy, the forest carbon sink is a solely policy drivenecosystem service. The demand for this service was initiated by signingthe UNFCCC agreement in 1992 and ratifying the Kyoto Protocol in1997. The Kyoto protocol not only created the demand, but it also dictat-edwhich part of the service provision capacity is considered as the supplyfor the service. This accounting of the carbon sink supply as specified bythe Kyoto protocol is reported annually in the National Inventory Report(NIR) (2013). In the accounting according to the protocol, the carbon sinkis estimated by the carbonbalance,where an increase in the forest carbonpools is regarded as a sink and a decrease an emission or a source.

The forest carbon balance is estimated according to two articles inthe protocol. According to Article 3.3, the changes in the forest landarea are estimated by the reforestation, afforestation and deforestationactivities. In addition, the direct greenhouse gas (GHG) emissionsfrom silvicultural practices such as biomass burning, liming and fertili-zation are added to the carbon balance defined by this Article. Article3.4 determines the carbon balance within the different carbon pools(biomass, soil, litter and dead wood) in forests, which are affected byforest management activities. The pool of harvested wood products isnot accounted for in the carbon sink during the first Kyoto protocol,which is currently still reported, but it will be accounted for in thesecond Kyoto period. Currently, the calculations based on Articles 3.3and 3.4 imply that Finland both generates emissions and has a majorsink. According to the latest NIR (2013), the Finnish sink based onArticle 3.4 was 10-fold compared to the emissions based on Article 3.3

d productsLitter and dead wood

Forest growth

Standing biomass

Soil

Carbon sink

Mutual loss

no. of policies6 4 2

mitigation

Trade-offMutual benefit

rgy and carbon sink ecosystem services. The dashed arrows indicate the additional carbonent period. The circles indicate the total number of identifiedpolicy outputs (no. of policies)loured inner circles indicate the number of those policy outputs that generatemutual ben-interpretation of the references to colour in this figure legend, the reader is referred to the

changemitigation: An ecosystem service approach to forests as carbonx.doi.org/10.1016/j.forpol.2014.09.003

5M. Makkonen et al. / Forest Policy and Economics xxx (2014) xxx–xxx

and 50% of the total GHG emissions of Finland, which can be seen to setthe overall demand for this ecosystem service. According to the rules inforce, the forest sink can only partly compensate the total GHG emis-sions. This cap on the demand has been set in order to ensure thatother Kyoto protocol commitments are not undermined, that onlyhuman induced sinks are credited and that disturbances caused byextreme events do not risk the accounting (Ellison et al., 2011).

3. Results

3.1. The governance structure

The policies that we identified to affect the supply and/or demand ofthe two climate change mitigating ecosystem services in Finland aregoverned by several sectors, i.e. they are spread horizontally acrossfour ministries. The policies relating to energy and GHG emissions aregoverned by the Ministry of Employment and the Economy and theMinistry of Finance. Forest management and, land use and nature con-servation, are governed by the Ministries of Agriculture and Forestry,and Environment respectively. All the identified policies are listed inTable 1. Most of the policies at the national level are influenced by EUpolicies, although some policy areas are exclusively national (Table 1).Notably nearly all of the policies governed by theMinistry of Agricultureand Forestry implement solely national policy because there is no com-mon EU forestry policy. The only exception is the Act 263/1991 on thepart of aerial spraying of biological pesticides that is based on an EUDirective (Table 1).

3.2. Policy emphasis placed on the two forest ecosystem services

The analysis shows that the policy outputs with strengthening andweakening effects on the demand and supply of the two ecosystemservices have reinforced forest bioenergy more than the carbon sink(Tables 2, 3 and 4). Forest bioenergy has been strengthened by numer-ous policy objectives and instruments that have affected the servicepositively through direct steering. Especially the demand for forestbioenergy has been directly reinforced by several objectives and instru-ments (Tables 2 and 4). Includingboth direct and indirect governing,wedid not find any policy outputs that would clearly weaken the demandfor forest bioenergy. The Kyoto protocol with the EU member states'jointly agreed GHG emission targets (Kyoto 1 and 2)2 and a national cli-mate and energy strategy (FG, 2013)2, have required an increased use ofrenewable energy (Table 2). In Finland, forest bioenergy has been con-sidered central inmeeting these requirements, and thus all the three na-tional strategies concerning energy and climate (FG, 2009; FG, 2013;MEE, 2011)2 have aimed at increasing the use of forest bioenergy, andwood chips in particular. The demand for forest bioenergy (or renew-able energy in general) has also been strengthened financially furtherdown in the demand-chain by taxation, subsidies and exemptionsfrom buying emission rights. These financial instruments have been di-rected to energy producers (e.g. Acts 1396/2010, 1472/1994)2, industry(Act 311/2011)2, business companies and municipalities (Decree 1313/2007)2, small housing (Decree 128/2006)2 and rural areas (Decree 578/2012)2. The policy demand for the carbon sink has been limited to theKyoto protocol's two commitment periods, in which the forest carbonsink could only partly compensate the GHG emissions. In addition, theNational Forest Programme (MAF, 2010)2 has acknowledged thedemand for the carbon sink as an objective but has not operationalizedit with any specific instruments.

The only direct encouragements for the supply of the carbon sinkhave been statements in national strategies and programmes, andsimilarly to the national objective on the demand side, they have notbeen operationalized by any instruments (Table 3). These statements

2 All the policy references in the Results and Discussion are given in Table 1.

Please cite this article as: Makkonen,M., et al., Policy coherence in climatesinks and bioenergy sources, Forest Policy and Economics (2014), http://d

included objectives to restrict the forest land decrement (FG, 2013;MAF, 2010)2 and to promote silviculture and forest improvement (FG,2009; MAF, 2010)2. The supply of bioenergy, in contrast to the supplyof the carbon sink, has been strengthened with one direct instrument,which has been groundedwith an objective and secured by Act Amend-ments. The Act on the Financing of Sustainable Forestry (1094/1996)2

and the planned Act Amendments (100/2011 and 101/2011)2 have allsubsidised the harvesting of bioenergy resources. In addition to directsubsidies for harvesting bioenergy resources, other incentives to re-move biomass have also strengthened the supply of forest bioenergy.Examples include subsidies for the thinning of young stands (Act1094/1996)2, the specified aim to increase the industrial harvesting vol-umes (MAF, 2010)2 and the explicitly mentioned possibility to increasetotal harvest volumes by the planned removal of the limitations on theregeneration fellings (PAA 2012-1)2. There have also been numerousother policy outputs steering the studied ecosystem services more indi-rectly through nature protection, forest land area and forest manage-ment in general. Overall their impacts have been rather limited. Forexample, 11 objectives and instruments have indirectly weakened thesupply of forest bioenergy (Tables 3 and 4) but their effects were spa-tially limited. The effects of all of the policy objectives and instrumentson the demand and the supply of the two services are detailed in thesupplementary material, Appendices A and B, respectively.

3.3. Coherence among policies

We analysed policy coherence based on the impacts of all theassessed objectives and instruments. The analysis revealed that trade-offs between the two forest ecosystem services have mainly been gen-erated by policy objectives and instruments targeting forest bioenergyeither directly or closely (Fig. 2, Tables 2 and 3). These trade-offs havenot been made explicit nor alleviated in the policy documents them-selves. On the demand side, the instruments and objectives that havestrengthened forest bioenergy use directly or via renewable energy ingeneral, have indirectly weakened the demand for the carbon sink.This situation has arisen because forest bioenergy has been consideredto be carbon neutral. Under current regulations, the use of forestbioenergy has therefore not increased the demand for the carbon sinkand moreover, if forest bioenergy replaces fossil energy, it decreasesthe demand for carbon sequestration (see Appendix A). Thus, the policydemand for increased use of wood chips (MEE, 2011, FG, 2013)2 sup-ported by subsidies (Act 1396/2010)2 and other instruments has de-creased the demand for the carbon sink. This conflict can be observedin the Kyoto protocol instruments. Although the protocol has generatedsimilar effects (simultaneously strengthening and weakening) on bothof the ecosystem services, it has favoured forest bioenergy more. Morespecifically, both commitment periods of the Kyoto protocol haveallowed a substantial increase in the consumption of forest bioenergyin accordance with the national targets for forest bioenergy, whilstthey have set the demand for the carbon sink lower than its current sup-ply (seeAppendixA). Similar to thedemand side, the conflicts on the sup-ply side have emerged around policies relatingmainly to forest bioenergyand biomass removal. Financing the harvesting of forest bioenergy re-sources, limits for the regeneration fellings and the aim to increase theharvested volumes have all generated trade-offs between the ecosystemservices.

Mutual benefit, i.e., win–win situations harnessing both ecosystemservices, has been generated by policy instruments related to climatechange mitigation in general or objectives and instruments addressingthe preconditions for producing both ecosystem services. The Kyotoprotocol has set obligations to reduce the fossil fuel GHG emissionsand as the methods have not been specified, they have strengthenedthe demand for both ecosystem services. On the supply side, several ofthe objectives and instruments that have been closely related to forestgrowth and forest area have generated a mutual benefit to the ecosys-tem services. Most of these have affected both ecosystem services

changemitigation: An ecosystem service approach to forests as carbonx.doi.org/10.1016/j.forpol.2014.09.003

Table 2Identified strengthening “+”, weakening “−”, both strengthening andweakening “+/−” or not known “?” effects that the policy outputs have on the demand of the carbon sink and forestbioenergy based on the literature review presented in Appendix A. The parentheses in the effects indicate that the effect by the output is indirect. The effects are listed underneath theresource flow compartments, visualised in Fig. 2, that they most directly link to and the mutual loss, trade-off or mutual benefit interactions between the two ecosystem services thatthe effects generate are highlighted by red, yellow and green according to Fig. 1. Policy outputs were further classified by indicating the dominance of objectives or instruments. Thereferences are listed in Table 1. Please note that policies may appear many times in the table.

Resource flow compartment

Policy output

Reference Objective/

instrument

Forest

bioenergy

Carbon

sink

Climate change mitigation

Obligation for EU and its member states to cut down the GHG

emissions by 8% from the year 1990 by the year 2012

Kyoto 1 Instrument (+) (+)

Obligation for EU and its member states to cut down the GHG

emissions by 20% (compared to the emissions in 1990) and 16%

target outside the emission trading system (compared to the year

2005) by the year 2020

Kyoto 2 Instrument (+) (+)

Forest bioenergy

A substantial increase in the use of energy wood is needed in order

to reach the national GHG emission target (−80%) by the year 2050

FG 2009 Objective + (−)

The consumption of renewable energy should increase up to 38% of

all energy consumption by the year 2020

FG 2013 Objective (+) (−)

Efforts will be made to ensure that the EU sustainability criteria for

bioenergy does not jeopardise or prevent the use of sustainable

domestic biomass in energy production and that the burning of

sustainable biomass remains carbon neutral in emission inventories

FG 2013 Objective (+) (−)

The production and use of energy produced from wood sources

should be increased

MAF 2010 Objective + (−)

Subsidy should be provided to wood based heat and electricity

production plants

MEE 2011 Objective + (−)

Subsidy to wood based heat and electricity production plants Act 1396/2010, Instrument + (−)

Taxation favours wood based energy resources compared to fossil

fuels and other energy resources

Act 1472/1994, Act

1260/1996,

Bill 91/2012

Instrument + (−)

Plants that use only biomass are exempted from buying emission

rights

Act 311/2011 Instrument (+) (−)

Financing the investments concerning the use of renewable energy

of private businesses, municipalities or other communities

Decree 1313/2007 Instrument (+) (−)

Financing the heating system shift into renewable energy based in

housing

Decree 128/2006 Instrument (+) (−)

Financing projects and investments concerning bioenergy in the rural

areas

Decree 578/2012 Instrument (+) (−)

Obligation to enhance the use, development etc. of renewable

energy sources

Kyoto 1 Instrument (+) (−)

Wood chips

Increase the use of wood chips in CHP production and separate heat

production to 25 TWh (equivalent to 13.5 million m3 of wood chips)

per year by 2020.

MEE 2011, FG 2013 Objective + (−)

Biofuels

Obligations for the fuel suppliers to supply biofuels Act 446/2007 Instrument (+) (−)

Sustainability criteria for biofuels and bio liquids Act 393/2013 Instrument (+) (−)

Carbon sink

Carbon sink effects should be promoted MAF 2010 Objective (?) +

Carbon sink according to Article 3.4 can compensate 0.59 milj. t CO2

of the GHG emission and the emissions caused according to the

Article 3.3 during the years 2008−2012.

Kyoto 1 Instrument (+/−) +/−

During the years 2013-2020, carbon sink according to Article 3.4 can

compensate 2.45 milj. t CO2 of the GHG emission if the carbon

balance > −23 milj. t CO2. Furthermore the balance should not be

lower than −20.5 milj. t CO2 as this would be considered as

emissions. The GHG emissions in the Article 3.3 cannot be

compensated by the Article 3.4 sink

Kyoto 2 Instrument (+/−) +/−

6 M. Makkonen et al. / Forest Policy and Economics xxx (2014) xxx–xxx

indirectly. Examples of these include obligations to create new saplingstands (Acts 1093/1996, 263/1991 and PAA 2012-2)2, limiting prescribedburnings (ANF 100/2011)2 and distributingfinancial compensation afterforest damages (Act 105/2009)2. The objectives, which have governedcarbon sink supply directly and yet generated mutual benefit, haveincluded the strategic policy objectives on increasing silviculture(FG, 2009, MAF, 2010)2 and restricting forest conversion (MAF,2010, FG, 2013)2. These objectives have been targeted at the earlyparts of the supply chain, which have further strengthened the

Please cite this article as: Makkonen,M., et al., Policy coherence in climatesinks and bioenergy sources, Forest Policy and Economics (2014), http://d

supply of forest resources for other ecosystem services includingalso the provisioning services.

Finally we identified three policy instruments and one objective, forwhich the impacts could not be classified into mutual benefit or trade-offs. Simultaneously strengthening and weakening impacts on bothecosystem services were found in the policy outputs that govern landuse (Act 132/1999)2, forest management from the part of allowinguneven-aged forestry (PAA 2012-1)2, and compensation of GHG emis-sions by the forest carbon sink according to the Kyoto protocol (Kyoto

changemitigation: An ecosystem service approach to forests as carbonx.doi.org/10.1016/j.forpol.2014.09.003

Table 3Identified strengthening “+”, weakening “−”, both strengthening andweakening “+/−” or not known “?” effects that the policy outputs have on the supply of the carbon sink and forestbioenergy based on the literature review presented in Appendix B. The parentheses in the effects indicate that the ecosystem service is indirectly affected by the output. The effects arelisted underneath the resource flow compartments visualised in Fig. 2 that they most directly link to and the mutual loss, trade-off or mutual benefit interactions between the twoecosystem services that the effects generate are highlighted by red, yellow and green according to Fig. 1. Policy outputs were further classified by indicating the dominance of objectivesor instruments. The references are listed in Table 1. Please note that a given policy may appear many times in the table.

Resource flow compartment

Policy outputs Reference Objective/

instrument

Forest

bioenergy

Carbon

sink

Wood chips

Financing should be given to energy wood harvesting from young

forests

MEE 2011 Objective + (−)

Financing the energy wood harvesting from young forests Act 1094/1996, (ANF

101/2011 + ANF

100/2011)

Instrument + (−)

Biomass removal

The Industrial wood harvesting volumes can be significantly

increased

MAF 2010 Objective (+) (−)

Financing should be given to preserve and sustain forest areas with

high biodiversity value in southern Finland

MAF 2010 Objective (−) (+/−)

Protecting public or private forests or preserving forests as natural

stands

Act 1096/1996, Act

62/1991

Instrument (−) (+/−)

Financing permanent and temporary protection of private forest with

high biodiversity value in southern Finland

Act 1096/1996, Act

1094/1996, ME 2008

Instrument (-) (+/−)

Financing (Environmental support subsidy) biodiversity and other

than wood production activities in silvicultural forests

Act 1094/1996, ME 2008 Instrument (−) (?)

Financing the tending of young stands Act 1094/1996 Instrument (+) (+/−)

Obligation to remove damaged or cut trees in the managed forests Act 263/1991, PAA

2012-2

Instrument (+) (+/−)

Tree age and trunk size limitations for the regeneration and

intermediate fellings

Act 1093/1996 Instrument (−) (+)

The limits for regeneration fellings would be removed PAA 2012-1 Instrument (+) (−)

Limits for the fellings in order to store biodiversity, landscape etc. Act 1093/1996 Instrument (−) (?)

Limits for the origin of biofuel and bio liquid resources Act 393/2013 Instrument (−) (+/−)

Forest area

Restrict the shift of forest land into other land use categories MAF 2010 Objective (+) +

In various fields of operation, the aim is to keep deforestation at a

minimum

FG 2013 Objective (+) +

Obligation to create a new sapling stand after regeneration fellings Act 1093/1996 Instrument (+) (+)

Financing forest regeneration Act 1094/1996 Instrument (+) (+)

Shield forests and forest areas that protect the tree line Act 1093/1996 Instrument (+/−) (+)

Obligation to create a new sapling stand after a forest damage Act 263/1991, PAA

2012-2

Instrument (+) (+)

Land use for forest areas versus parks, recreation areas,

settlement/urban areas, agricultural areas etc.

Act 132/1999 Instrument (+/−) (+/−)

Removal of the obligation to regenerate a forest, of which area is

less than 0.3 ha

PAA 2012-1 Instrument (−) (+/−)

Removal of the obligation to regenerate a forest on the unproductive

drained organic lands

PAA 2012-1 Instrument (−) (+/−)

Forest growth

Aim to increase the silviculture (and forest improvement) FG 2009, MAF 2010 Objective (+) +

Financing the prescribed burnings as a site preparation method Act 1094/1996 Instrument (−) (−)

Financing the remedial fertilisation Act 1094/1996 Instrument (+) (+/−)

Financing the building and renovation of forest roads Act 1094/1996 Instrument (+) (+)

The financial compensations after forest damages Act 105/2009 Instrument (+) (+)

Allowing uneven-aged forestry PAA 2012-1 Instrument (+/−) (+/−)

Limits for the selection of tree species Act 1093/1996 Instrument (−) (+/−)

Financing the prescribed burnings is limited only to nature

management

ANF 100/2011 Instrument (+) (+)

Financing the ditch cleaning and supplementary ditching Act 1094/1996, ANF

100/2011

Instrument (+) (+/−)

7M. Makkonen et al. / Forest Policy and Economics xxx (2014) xxx–xxx

1 and 2)2. One mutual loss has been generated by financing prescribedburnings (Act 1094/1996)2. However, the use of this specific instrumenthas almost ceased (Finnish Forest Research Institute, 2012) and it isstrongly restricted in the amendments to the Act (ANF 100/2011)2. Wealso identified several outputs where the sign of the impact was clearfor one ecosystem service but not for the other. For instance, protectingforest (e.g. Act 1096/1996 and ME 20082) has weakened the supply offorest bioenergy; whilst its effect on the carbon sink has not beenclear (Appendix B). Similar examples are instruments governing man-agement of peatlands under forestry, i.e. financing ditch cleaning and

Please cite this article as: Makkonen,M., et al., Policy coherence in climatesinks and bioenergy sources, Forest Policy and Economics (2014), http://d

supplementary ditching (Act 1094/1996)2 and removal of the obligationto regenerate forest on peatland (PAA 2012-1)2.

4. Discussion

4.1. Policies favour the ecosystem service that has established markets

Our analysis of policies addressing two climate change mitigatingforest ecosystem services in Finland shows that policy outputs advanceforest bioenergymore than carbon sequestration. Overall, current policies

changemitigation: An ecosystem service approach to forests as carbonx.doi.org/10.1016/j.forpol.2014.09.003

Table 4Summary of the results shown in Tables 2 (a) and 3 (b). The number of objectives and in-struments whose effects on forest bioenergy and carbon sink are strengthening “+”,weakening “−”, both strengthening and weakening “+/−”, and not known “?” aresummarised together with the ratio of policy outputs that have a direct effect comparedto the total number of identified policy outputs. The number of direct objects and instru-ment is given in parentheses in all the sections where they have been identified.

a) Demand b) Supply

Objectives Instruments Total Objectives Instruments Total

Forestbioenergy

+ 6 (4) 11 (2) 17 5 (1) 12 (1) 17− 0 0 0 1 10 11+/− 0 2 2 0 3 3? 1 0 1 0 0 0

Direct/total 6/20 2/31Carbon sink

+ 1 (1) 2 3 3 (3) 8 11− 6 9 15 2 3 5+/− 0 2 (2) 2 1 12 13? 0 0 0 0 2 2

Direct/total 3/20 3/31

8 M. Makkonen et al. / Forest Policy and Economics xxx (2014) xxx–xxx

have dominantly strengthened both demand and supply of forestbioenergy. Especially demand for bioenergy has been supported withspecific national objects and instruments, which indirectly have reducedthe carbon sink. In contrast, the governing of the carbon sink has not beenoperationalized in terms of any national instruments. The supply anddemand of this ecosystem service have been directly governed only bynational strategies and the Kyoto protocol. Our findings imply thatpolicies have both directly and indirectly strengthened more the forestecosystem service that has markets and market value compared to theservice that is not exchanged inmarkets. This is in linewith the theoret-ical expectations of ecosystem service literature (e.g., Fisher et al., 2009)and resonateswith policy analyses that have identified how strong eco-nomic actors engage in policy (Cashore and Vertinsky, 2000; Howlettand Rayner, 2007).

The focus being on steering the market, rather than on securing theenvironmental public good, is in conflict with environmental policy andeconomics that suggest ecosystem services to require balanced publicgovernance (Boyd and Banzhaf, 2007). Other collective benefits thanthe provisioning of ecosystem services may also have contributed tothe market orientation. For example, the creation of employment andthe perceived security of domestic energy sources are likely to providecollective justifications for public policies supporting a market focus(Åkerman et al., 2010). The result of the current policy focus and volumehas left the regulating ecosystem service, characteristically a publicgood, with little governance. Carbon sequestration governance standson uncertain foundations, as it relies only on markets that are newand solely policy based (Corbera and Brown, 2008). These markets aresensitive to political changes and can in theworst case disappear literallyovernight.

In addition to finding that policy outputs enhance forest bioenergymore than carbon sequestration, we also find that the demand of forestbioenergy has been steered more directly than the supply of the sameservice. An obvious explanation could be that there is currently noshortage of forest biomass in Finland. In contrast to the current steeringof the demand for forest bioenergy, earlier in the 1960s Finland's forestpolicy aimed at securing rawmaterial for the forest industry by focusingthe steering on forest productivity, i.e. the supply of the provisioningservice (Kotilainen and Rytteri, 2011). The difference in the governanceapproaches between timber production in the 1960s and current forestbioenergy can be explained by the shift in the social concern over forestresource supply versus demand. Another possible explanation may bethe difference in policy sectors. The supply is governed by the Ministryof Agriculture and Forestry and the Ministry of the Environment,which both have a broad range of interests in forest ecosystem servicesincluding not only provisioning but also regulating and cultural services.

Please cite this article as: Makkonen,M., et al., Policy coherence in climatesinks and bioenergy sources, Forest Policy and Economics (2014), http://d

The demand for the services, on the other hand, is steered by theMinistryof Finance and the Ministry of Employment and the Economy, whose in-terests in forests are mainly in the provisioning services thus permittingmore direct steering to facilitate forest industry and bioenergy.

4.2. Which policies generate trade-offs and which promote both services

We have explored policy coherence among policies governing thetwo forest ecosystem services by looking at mutual benefits and trade-offs in the impacts of policies, and found clear differences among thepolicy impact areas. Policies closely supporting forest bioenergy, havecommonly generated a trade-off in terms of reduced carbon sequestra-tion. These identified trade-offs are expected aswe find policies strength-ening more the provisioning service of forest bioenergy than theregulating service of carbon sequestration. It has previously been foundthat increasing the production of provisioning services generallyweakensthe regulating and supporting services (e.g. Rodriguez et al., 2006; Haucket al., 2013). Our assessment supports these findings, but shows furtherthat the trade-offs generated by the policies strengthening the forestbioenergy demand are inevitable, as long as energy production fromforest biomass is taken as “carbon neutral” and therefore directly de-creases the demand for carbon sequestration.

Mutual benefits have been generated by those objectives and instru-ments that relate closest to the general aim to mitigate climate changeor generally to the role of forest in contributing to both services. Atlater stages the policies can be made coherent by addressing thetrade-offs explicitly, as in the Kyoto protocol. But in the Kyoto protocol,the coherence has remained only at the policy level as it has supportedthe increase in forest bioenergy and simultaneously kept the demandfor the carbon sink lower than its current supply. Therefore, it appearsthat only those general policymechanisms,which either specify generaltargets to be reached or have concentrated only on providing the basicresources, have been able to jointly increase both services. This findingis supported by Nelson et al. (2008), who assessed the trade-offsbetween carbon sequestration and species conservation in policy incen-tives. They found that increasing both targets succeeds best by moregeneral and less specified policies. From a policy coherence perspective,these ecosystem services represent a situation where full coherence isnot attainable and probably not even desirable (see Jordan and Halpin,2006). If policies supporting one ecosystem service are abandoneddue to their effect on the other service, the end result may be evenmore harmful, e.g. increased use of fossil energy. The challenge lies indeveloping policies that can ensure an informed and balanced manage-ment of both services that would support the aim, articulated byNabuurs et al. (2007) and Obersteiner et al. (2010), of fitting thesetwo ecosystem services in the same forests. Our analysis is a first stepin this direction bymaking the links between the existingpolicy outputsand the services visible.

4.3. The usefulness of ecosystem service concept in policy evaluation

In this paper, we have explored the proposal that the use of the eco-system service concept would support decision making (Norgaard,2008; Daily et al., 2009, de Groot et al. 2010) and enable a comprehen-sive evaluation of policy impacts (Hauck et al., 2013). We take thechallenge further by analysing the impacts and trade-offs generatedby a broad range of policy outputs. This analysis is fruitful for severalreasons. First, we analyse the effects separately on supply and demand,which allows identifying very different impacts. Second, we can identifynumerous indirect impacts and links between policies that otherwiseeasily remain invisible in most sector specific policy evaluations. Third,our analysis provides a framework for empirical assessments of policyimpacts on ecosystem services that have been generally lacking(Urwin and Jordan, 2008; Primmer and Furman, 2012; Hauck et al.,2013).

changemitigation: An ecosystem service approach to forests as carbonx.doi.org/10.1016/j.forpol.2014.09.003

9M. Makkonen et al. / Forest Policy and Economics xxx (2014) xxx–xxx

Amajor advantage of an approach focusing on ecosystem services isthe drive to assess the impacts of policies simultaneously on severalgoods and benefits that ecosystems provide to humans. This gives aholistic view of the policy coherence from an ecosystem service per-spective. Our study with two forest ecosystem services has provided afirst step along this line. As the knowledge of the interactions betweenvarious ecosystem services as well as the pathways of policy impactincreases, the assessment can be extended to cover more ecosystemservices. The lack of some specific data is a potential problem for com-prehensive analyses. In our case it is, for example, unclear how thewell manifested policy outputs on ditch cleaning and forest biodiversityconservation affect the supply of carbon sequestration.More research isthus needed to better grasp the impacts of these policies on ecosystemservices.

Our approach also stresses the need to examine the multitude ofexisting policy outputs and the current market systems that introducestrong path dependencies in the processes. Gradual changes and feed-back loops may change the system, but given the complexity (Fig. 2) itis difficult to know how it will change. If, for example, the EU introducessustainability criteria on solid bioenergy fuels analogous to those forliquid fuels (Act 393/20132 implementing the EU RES-directive), theincentives for using bioenergy are likely to change. In these kinds ofsituations, our approach can highlight the relevant trade-offs and chainsof effect in ecosystem services that the new policy-mix will generate.

5. Conclusions

Our study has analysed the coherence of the broad and complexmixof policy outputs affecting two different forest ecosystem services thatmitigate climate change: forest bioenergy and carbon sequestration.The analysis revealed that existing policy outputs promote bioenergywith more numerous and more specific instruments compared tocarbon sequestration. The finding demonstrates that a tangible ecosys-temservicewith establishedmarkets is governedmuchmore rigorouslythan the one for which markets are only emerging and remain highlyuncertain. This implies that current markets and governance are notset up to balance the two services. In particular those policies thatsteer closely forest bioenergy in a targeted fashion tend to generatetrade-offs between the ecosystem services. In contrast, general policiespromote the supply and demand of both services.

Although full policy coherence is probably not possible, the biasfavouring certain ecosystem services and the multifaceted indirect andunintended effects of policies should be explicitly addressed in policydesign and evaluation. Our study demonstrates that it is possible tomeaningfully analyse forest related policies from an ecosystem serviceperspective, provided that one pays attention to the multiple functionsof forest ecosystems and the policy induced trade-offs between differentecosystem services. This can raise new types of policy debates, but ananalysis of ecosystem serviceswill not necessarily change policymakingitself. In the short run, the dominance of the tangible services withestablished markets can be so strong that novel views are disregarded.In the long run, the concept may change the way policies are developedby altering the framing of the use of ecosystems.

Acknowledgements

Support from the Ministry of Agriculture and Forestry (projectPOLKEVA), the Academy of Finland (grant 259929, GREENPOL) andEuropeanUnion (FP7 grant nr 244065, POLICYMIX) is gratefully acknowl-edged.We thank the two anonymous referees for their constructive com-ments, which clarified the assessment and the argumentation.

Appendices A and B. Supplementary data

Supplementary data to this article can be found online at http://dx.doi.org/10.1016/j.forpol.2014.09.003.

Please cite this article as: Makkonen,M., et al., Policy coherence in climatesinks and bioenergy sources, Forest Policy and Economics (2014), http://d

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