Abstract Forests and the resources they offer have been important for the Swedish economy for a long time, and the forest industry remains a large part of the manufacturing industry even as the economy is becoming more service-based. Forests are also increasingly seen as an important source of biofuels that can be used to reduce the reliance on fossil fuels and to reach the target for a carbon neutral economy by the year 2050. Additionally, the preservation of forests for their various ecosystem services remains high on the political agenda. This thesis examines important economic issues of ecosystem services and bioenergy from forests as well as the goal conflicts within forestry in Sweden in four separate papers. The aim is to contribute to the research on optimal social use of Sweden’s forests and the future of forestry when considering ecosystem services and the trade-off between demands for different forest products. This is particularly important since Sweden is moving towards a circular bio-economy where forests are becoming increasingly important as a fuel and material source. The first paper presents the current state of ecosystem service valuation and the challenges that needs to be addressed in the field when moving forward. The second paper applies the methodology of benefit transfer in a spatially explicit context to provide maps of ecosystem services for Sweden. The results are reasonable compared to previous estimations and the main contribution is the mapping of the spatial distribution of carbon sequestration and recreation in Sweden. The third paper focuses on the market for biomass and examines the elasticity for demand for the different sectors that uses forest biomass as an input. The findings are that the pulp and heating sectors are more sensitive towards price changes, while sawmills would to a larger extent be able to transfer increasing costs to their customers. This is in line with the expected outcome that as demand for biofuels increase, the heating sector would compete for biomass mainly with the pulp sector, rather than the sawmill industry. The fourth paper examines the effect of internalizing carbon sequestration on the rotation periods of forests in Sweden, as well as the effect of increased biofuel production. The results are that internalizing carbon sequestration would lengthen rotation periods, but there are large regional differences, and a carbon price that would barely increase rotation in southern Sweden may lead to infinite rotations in northern Sweden.  This thesis recommends joint optimization of ecosystem services with market values but recommends against paying forest-owners for the carbon their forests sequester. While carbon storage would increase, a large part of the money would go towards paying for sequestration that already would occur in absence of the payment for ecosystem services scheme. Additionally, it would be difficult to price the subsidy/tax on a level that extends rotation in all the country without it leading to infinite rotation periods in any parts of the countries, which would have dramatic effects for the local forest industry. The goal conflicts within the Swedish forest sector needs to be examined further, going forward. This thesis touch upon the complexity with some of these goal conflicts, both between industry such as the pulp and heating sectors, but also between the environmental goals of “Sustainable Forests” and “Reduced Climate Impact”, as well as with recreational uses of forests. There is certainly potential for synergy in some cases, the fourth paper showed favorable outcomes when optimizing for timber, biofuels and carbon sequestration, but Payments for Ecosystem Services schemes are expensive and may not be the most efficient use of taxpayer money.  

A spatially analyse of the production structure and input choices for the heating, sawmill, and pulp sectors in Sweden is conducted using a panel data set includes quarterly data for period 2011 to 2016 across 21 counties. Focus is on price and input substitution elasticities, scale effects and technical change measures. A single-output regional translog cost models is developed and estimated. The translog specification is chosen for its flexibility and for the range of alternative hypotheses that can be tested. The results indicate relative elastic price elasticities, limited possibilities to exploit scale effects to future reduce the variable production costs, technical restriction in input substitution options, and mature production technologies that still need to be invested in to reduce technical deterioration over time. The results are usable for practitioners, policy and decision-makers as well as inputs in future academic modelling, especially when assessing the paths towards a biobased economy.

The objective of this licentiate thesis is to determine the value of ecosystem services and their relative importance, and to develop methods to weight these benefits against the market value of timber and other uses for forests. These issues are addressed in two papers with a focus on spatial modeling of ecosystem services and the method of benefit transfer. The aim is to contribute to the research regarding the optimal social use of forests for Sweden in particular and the future of forestry in general, particularly when it comes to ecosystem services and the tradeoff between demands for different forest products.

The first article is a review study of previous studies estimating monetary valuations of ecosystem services of forests during the past 20 years. The review has a particular focus on spatial modeling of ecosystem services and the underlying characteristics that influence the value of an ecosystem service. In total, 118 studies are included in the review, and themajority of these studies do not model the spatial distribution of the ecosystem services and assume it identical across the area that is being studied, but the share of spatially explicit studies is increasing in the last ten years. The review finds that carbon sequestration, recreation, and ecosystem services related to the prevention of natural hazards,e.g. floods and avalanches, are the forest based ecosystem services that consistently are valued highly in the reviewed studies. There is however, significant variation in the values reported for similar ecosystem services.

The second article is focused estimates the value of recreation and carbon sequestration in Swedish forests, using the benefit transfer approach and a spatially explicit perspective. The distribution for the services is mapped for the whole country, and the monetary value applied to the services is based on comparisons between the results of previous studies. The aim of the article is to develop the use of spatial mapping on larger scales than has been done previously, and add to the limited number of ecosystem service valuations for the Nordic countries by providing a fully populated spatial mapping of two of the more important ecosystem services of Sweden. In general, values found for the two ecosystem services are almost as high as timber values, but the values and their distribution varies highly across the landscape. Both ecosystem services are found to have higher values in southern Sweden and close to cities.

3 PhD projects: Markets and price formulation (LTU, economics); Technologies and value chains (Chalmers) and; Location and industrial change (LTU, energy engineering). The general system perspective has its starting point in the importance of biomass and bioenergy in the transition to a long-run sustainable energy system and to an efficient spatial resource utilization and production with increased value chains. Focus is on biorefineries. A spatial approach will be applied in combination with national energy system modelling in connection with technological development potentials and industrial applications is linked to the feed-stock supply as well as market and policy issues.

Utvecklingen av kommersiella bioraffinaderikoncept är av strategisk betydelse för Sveriges utveckling till en biobaserad ekonomi. Bioraffinaderier bidrar till att ersätta fossila med biobaserade råvaror. Dessutom bidrar de till en smartare användning av biomassa, ökat förädlingsvärde samt utvecklingspotentialen av nya bioprodukter. Tekniska potentialer och industriella tillämpningar sammanlänkas med råvaruförsörjning samt marknads-, innovations- och policyaspekter. Projektet är tvärvetenskapligt och omfattar integration av modeller som kan redogöra för samspelet mellan olika sektorer, som inkluderar geografiska variationer av utbud och efterfrågan av skoglig biomassa, och som kan fånga effekterna av förändrade marknadsvillkor och styrmedel. För modellintegrationen kommer verktyg tas fram för att underlätta kommunikation och återkoppling mellan de ingående modellerna. Projektet syftar till att generera ny kunskap och ett modellramverk för avancerade systemanalyser relaterade till (i) den svenska biomassa och dess roll i ett hållbart energisystem och (ii) industriell omvandling av processindustrin i riktning mot ett framtida bioraffinaderi branschen. Genomförandefasen bygger på tre uppgiftsområden.

Forests provide a variety of resources and benefits, but only a few such as timber are traded on markets. Ecosystem service valuation is a method to quantify the non-market benefits of forests in order to understand the full costs of forest management. This review goes through ecosystem service valuations of forests during the past 20 years, with a particular focus on spatial modeling of ecosystem services. The findings are that there is a huge variation in the values reported for similar ecosystem services, but that carbon sequestration, recreation in forests, and hydrological services such as watershed protection and flood prevention are the ecosystem services that consistently are valued highly in the reviewed studies. In the last ten years, studies are more frequently modeling ecosystem services spatially.

This paper estimates the value of two ecosystem services, recreation and carbon sequestration, in Swedish forests. The services are spatially mapped for the whole country, and the benefit transfer method is used to find their monetary value. This study means to develop the use of spatial mapping on larger scales than has been done previously and add to the limited number of ecosystem service valuations for the Nordic countries by providing a fully populated spatial mapping of two of the more important ecosystem services of Sweden. In general, values found for the two ecosystem services are almost as high as timber values, but the values and their distribution vary highly across the landscape. Both ecosystem services are found to have higher values in southern Sweden and close to cities, and areas that are important for biodiversity also show high values for both carbon sequestration and recreation.