Recession hits forestry in Europe, US

The current economic crisis has pushed the European and the US forestry sector into an even larger slump, a UN study has said.

The joint report by UN Economic Commission for Europe and the UN Food and Agriculture Organisation released on Tuesday said that consumption, production and trade of forest products reached record highs in 2006, with a slight downturn registered in 2007.

That decline accelerated in 2008, marking the sharpest drop since the first oil shock of 1973, and continued into the first half of this year, it said.

The 56-country UNECE, whose membership includes the United States and Canada, accounts for nearly half of global forests, and the region is also the largest global producer, consumer, exporter and importer of wood and paper products.

The study pointed to marked distinctions between the three UNECE subregions, with consumption marking 3 per cent growth in the Commonwealth of Independent States.

However, with forest products markets primarily driven by housing construction requiring lumber, which tumbled dramatically in North America and Europe, consumption plummeted by nearly 13 per cent and almost six per cent, respectively, it said.

From a peak of 2.2 million new homes in 2006, new constructions took a nose-dive, falling 25 per cent in 2007, 34 per cent in 2008 and an estimated 50 per cent this year.

The UNECE/FAO study said that housing construction was down by 14 per cent last year and the same amount in 2009.

Although more houses continue to be built in the CIS, the pace has softened, the agencies said. The fall in demand has pushed the real prices of building materials to their lows since the 1940s, while the paper sector is also falling deeper in to crisis, with production in Europe, North America and the CIS all reporting declines.

UNECE and FAO reported that some mills in the region have permanently ceased their operations, while forest owners and managers have cut back on their harvests, resulting in unemployment, as well as less income and tax revenues.

However, the report noted that the wood energy sector seems to be immune to the current economic downturn, as demand for renewable energy sources, such as wood biomass, continues to steadily climb thanks to government policies towards climate change mitigation and energy security.