EU Publishes New Guidelines to Incentivize Sustainable Forest Practices, Boosting Carbon Market Potential

The EU Commission has published two new guidelines to incentivise and reward sustainable forest practices. The "closer to nature" guidelines aim to strengthen forest multifunctionality and resilience to climate change, while fostering long-term economic and other societal benefits. The guidance on payment schemes for forest ecosystem services presents a variety of ways in which land managers, including foresters, may derive monetary benefits from the provision of the different ecosystem services. The two guidelines are key deliverables of the EU Forest Strategy. \n\nEU forests at risk due to lack of diversity\n\nForests in Europe have been shaped by human intervention for centuries. As a result, structural complexity and species diversity is unnaturally low in many parts of Europe: 75% of forests are even-aged and 1/3 of forests consist of only one species with another 50% limited to 2 or 3 species. Lack of diversity reduces the resilience of our forests. More than 60% of the biomass in European forests is exposed to risks such as fires, pest outbreaks or wind throws, impacting the capacity of forests for wood provision, carbon sequestration or other services. \n\n"Closer to Nature" is an ecosystem-based form of forest management that fosters more heterogeneous and diverse forests and rely less on human intervention. Natural dynamics and structural complexity are determining factors for forest resilience, and adaptive capacity. Forests composed of several tree species, age classes and life cycle stages are more resilient and adaptable to climate change and disturbances than even-aged monocultures and benefit forest functions, services and long-term forest productivity. \n\nCloser to nature forest management also provides the opportunity for tapping into the wider economic potential of forests beyond timber provisions. In addition to wood and non-wood materials and products, forests provide valuable ecosystem services, such as habitats for biodiversity, water purification, flood and climate regulation. Carbon sequestration and non-wood forest products, such as honey, mushrooms or wild meat are marketable sources of income. \n\nThe closer to nature guidelines follow from the EU Biodiversity Strategy 2030 and the EU Forest Strategy 2030 and have been developed in close collaboration with Member States and relevant forest actors. The guidelines can be used on a voluntary basis by national and regional forest authorities as well as directly by forest managers who wish to introduce elements of ‘closer-to-nature’ forestry into management practices. They will be made available in all EU languages to facilitate their broad uptake across the EU. \n\nPayment schemes for forest ecosystem services – an alternative option for providing income through sustainable and multifunctional management of forests\n\nForests not only provide wood and non-wood materials and products, but also multiple other services such as habitats for biodiversity, water purification, and regulation of floods and of climate. They have carbon sequestration and cooling capacities and play a role in providing renewable raw materials, food and medicines. These services are indispensable to fight climate change, transition to a circular bioeconomy and sustain a healthy society. \n\nDespite the actual value of, and increasing demand for, the large variety of forest ecosystem services, wood production remains the main – if not the only - source of income for forest owners and managers. Financial rewards or profits from other ecosystem services are very limited. \n\nThis voluntary guidance document aims to provide information and advice that help public and private entities and forest owners and managers develop andimplement payment schemes for forest ecosystem services. The new guidelines are expected to have a significant impact on the carbon market by promoting sustainable forest management practices that enhance carbon sequestration and other ecosystem services. By encouraging the adoption of 'closer to nature' forestry, the guidelines aim to increase forest resilience, biodiversity, and long-term economic benefits. This approach provides a more reliable source of carbon sinks for the carbon market while fostering a sustainable and multifaceted approach to forest management. The guidelines also encourage forest managers to derive economic benefits from providing diverse ecosystem services, including carbon sequestration. This potential shift in forest management practices could open up new opportunities for carbon market development and sustainable economic growth.