Mapping the future sustainable competitiveness resources: aspects of forests ownership/ Darnaus konkurencingumo saltiniu paieskos: misku nuosavybes aspektai.
Balkyte, Audrone ; Peleckis, Kestutis
1. Introduction
The agreement to launch the new European Union (EU) strategy for
smart, sustainable and inclusive growth--Europe 2020 (2010) creates a
need for research initiatives to develop the new concept of
competitiveness, with much of the research focusing on how sustainable
development and competitiveness interact (Balkyte and Tvaronaviciene
2010: 360).
On the one side, the challenge "to continually improve the
quality of life and wellbeing on Earth for present and future
generations" leads to the growing role of sustainable development.
On the other side, competitiveness race in the global economy is
becoming more aggressive. Competitiveness is both a test of the economy
and a chance to further enhance economic performance.
Generally, it is important not only to state the fact about the
achievements in the context of competitiveness, but the most important
"puzzler" is to find out the factors, which create the complex
competitive advantage of the country or region in the future (Balkyte
and Tvaronaviciene 2010: 359).
According to the strategy Europe 2020 (2010), EU Member States
should decouple economic growth from resource use, turning environmental
challenges into growth opportunities and making efficient use of their
natural resources.
There is a need for research initiatives to evaluate the natural
resources role for the competitiveness in the context of sustainable
development in the long prosperity.
It is generally recognized, that natural resources provide many
benefits to society and to the economy and play an important role in the
preservation of natural biodiversity and the mitigation of climate
change. The quality of our ecosystems--namely air, water, soils and
forests--should be ahead of negative impact of climate change.
Globalisation challenges increase the need to evaluate the basic
factors, such as land, capital and labour, with new approach. Climate
change and sustainable development dimension call for the
acknowledgement of the role of natural resources for competitiveness and
long-term development.
Despite the accepted importance of the forestry sector for
sustainable development, there is a significant lack of information on
forests ownership in Europe. The changing situation every year and the
lack of good praxis examples create a need for new research.
The aim of this article is to present the approach to natural
resources, especially forests, as to the one of the sustainable
competitiveness resources in the long prosperity with the specific focus
on its ownership.
First, the article presents the systematic view on sustainable
competitiveness, taking into account the development of competitiveness
concept in the context of sustainable development.
Second, the article provides an overview of the specific points of
the forests ownership practice in the world, some EU Member States and
Lithuania.
The existing theoretical views on forest ownership structure
differ, but the benefit of forests is generally recognized.
Generally, the science literature and actual political
documents' analysis of the specific points of the forests ownership
practice in some EU Member States and Lithuania in the context of
sustainable competitiveness is followed by the summary of the
conclusions.
It is expected that in the future forestry will continue to be
valued for the ability to serve a range of economic, environmental, and
social functions and growing forests could become the source of growing
sustainable competitiveness.
2. Competitiveness versus sustainable development
Being competitive or being only sustainable is easier than being
sustainable and competitive at the same time. Despite the fact, what the
European Union has the special strategy for sustainable development and
the separate new strategy Europe 2020 (2010) (before--Lisbon Strategy)
with the specific point to competitiveness, it should be generally
recognized the importance of the compatibility of competitiveness and
sustainable development.
Sustainable development is a fundamental and overarching objective
of the European Union, enshrined in the Treaty. The EU sustainable
development strategy, launched by the European Council in Gothenburg in
2001 and renewed in June 2006, brings together the many strands of
economic, social and environmental policy under one overarching
objective--to continually improve the quality of life and wellbeing on
Earth for present and future generations (Sustainable development ...
2009).
According to the EU strategy Europe 2020 (2010), Member States
should decouple economic growth from resource use, turning environmental
challenges into growth opportunities and making efficient use of their
natural resources.
Sustainable growth means building a resource-efficient, sustainable
and competitive economy, exploiting Europe's leadership in the race
to develop new processes and technologies, including green technologies,
accelerating the roll out of smart grids, exploiting EU-scale networks,
and reinforcing the competitive advantages of the businesses,
particularly in manufacturing, as well through assisting consumers to
value resource efficiency. Such approach will help the EU to prosper in
a low-carbon, resource constrained world while preventing environmental
degradation, biodiversity loss and unsustainable use of resources. It
will also underpin economic, social and territorial cohesion (Europe
2020, 2010).
The political topicalities create the need for research initiatives
to develop the new concept of "Sustainable competitiveness" in
the context of globalisation, with much of the research focusing on how
sustainable development and competitiveness interact (Fig. 1). Such
additional research will lead to new theoretical models describing the
relationships between international globalization, economic growth,
sustainable development, wellbeing and competitiveness (Balkyte and
Tvaronaviciene 2010: 341).
[FIGURE 1 OMITTED]
The concept of competitiveness and competitiveness models are still
far from creating a consensus. The new factors are becoming important
and a number of researchers provide the new models of competitiveness.
Globalisation challenges increase the need to evaluate the basic
factors, such as land, capital and labour, with a new approach. Climate
change and sustainable development dimension call for the
acknowledgement of the role of natural resources for long-term
competitiveness.
3. Competitiveness resources in the context of sustainable
development
3.1. Natural resources role for future competitiveness
According to the Global Competitiveness Index (GCI), provided by
World Economic Forum (WEF), there are three stages of development. In
the first stage, the economy in factor-driven and countries compete
based on their factor endowments: primarily unskilled labour and natural
resources. Maintaining competitiveness at this stage of development
hinges primarily on well-functioning public and private institutions,
well-developed infrastructure, etc. In the efficiency-driven stage of
development countries increase product quality. Finally, after the
efficiency-driven stage of development countries move into the
innovation-driven stage (Schwab 2009: 7).
The European Commission's prognoses are that the tensions will
be between production, consumption patterns and natural resources in
2025 (The World in 2025 ... 2009: 18). According to The World in 2025
... (2009: 14), there will be increasing scarcity of natural resources
in EU in 2025 and the EU can become more dependent on external sources.
For example, more than 50 percent of the major ore reserves are located
in very poor countries.
The new research tendencies lead to the acknowledgement of the
important role of natural resources, despite the fact, that country or
region could reach the innovationdriven stage.
A number of studies and researchers conclude that the relationships
between sustainable development and competitiveness are becoming deeper.
Porter and Linde (1995: 133) pointed out what there is a need for
thinking about the relationship between competitiveness and the
environment. An underlying logic links the environment, resource
productivity, innovation and competitiveness.
According to Wade-Benzoni (1999), maintaining the long-term
viability of the earth's ecosystems by using the earth's
resources sustainably helps ensure that economic opportunities are kept
open for the future generations.
The importance to control balance between economic development,
social development, and environmental development was mentioned by
Grybaite and Tvaronaviciene (2008). Lapinskiene and Peleckis (2009) have
also initiated to establish the relationship between the sustainable
development and the economic growth.
Berger (2008: 91) argues that national competitiveness should be
seen as a relative rather than an absolute concept that allows for a
benchmarking of nations. Some nations support competitiveness more than
others by creating an environment that facilitates the competitiveness
of enterprises and encourages long-term sustainability.
Taken together, all these researchers acknowledge the growing
direct or indirect role of natural resources for competitiveness.
Much of any country's economic well-being flows from natural,
rather than humanmade, assets--land, rivers and oceans, natural
resources (such as oil and timber), and indeed the air that everyone
breathes (Abel and Bernanke 1998: 30). Moreover, an economy's
output of goods and services depends on the quantities of available
inputs, such as capital and labour, and the productivity of those inputs
(Abel and Bernanke 1998: 182). Climate change and sustainable
development dimension call for the acknowledgement of the role of
natural resources for competitiveness, especially "sustainable
competitiveness", and long-term development.
Natural resources are the elements of the nature, which are used
for the people's needs. The classification of natural resources can
be different. Natural resources can be unfailing (sun energy, water) or
failing (renewable (forests) or non-renewable (minerals).
Further, the specific point to the one of the renewable
resources--forest--is addressed in this article.
Forests will be a major mitigation option over the next 30 to 40
years and represent a necessary transitional measure towards a
low-carbon economy. However, given the wide range of goods and services
provided by forests, mitigation and adaptation options in the forest
sector need to be fully understood and used in the context of promoting
sustainable development. Moreover, if forests are to effectively
contribute to climate change solutions, countries, and the international
community as a whole, will need to address several critical governance
issues affecting forests, including those relating to rights, tenure,
access, land-use planning, benefit-sharing, institutional and
cross-sectoral coordination and law enforcement (Forests and climate ...
2009).
According to Niskanen (2005: 13), there exists great potential to
develop non-wood forest products and services sector and new
entrepreneurship in this particular field in Europe. This is due to a
raising demand for individual, green and even luxury products together
with improvement in citizens' welfare.
In addition, government and private sector are promoting wood
products and "green building" for their environmental
friendliness (State of the World's ... 2009: 26).
Increasingly, forests are important for sustainable development,
societal well-being and the provision of key environmental services.
3.2. Global forest resources
It is expected that in the future forestry will continue to be
valued for the ability to serve a range of economic, environmental, and
social functions and growing forests could become the source of growing
sustainable competitiveness.
The world's total forest area is over 4 billion hectares,
which corresponds to an average of 0.6 ha per capita. The five most
forest-rich countries (the Russian Federation, Brazil, Canada, The
United States of America and China) account for more than half of the
total forest area (Global Forest ... 2010).
Europe, consisting of 48 countries and areas, accounts for about 17
percent of global land area but has one-quarter of the world's
forest resources, approximately 1 billion hectares, of which 81 percent
is in the Russian Federation (State of the World's ... 2009: 22).
Forests and other wooded land cover 177 million hectares or 42
percent of the land (terrestrial) area of the 27 Member States of the
European Union and are one of the most valuable multifunctional and
renewable natural assets EU has (Forestry Statistics 2009). The most
densely forested Member States are Finland (73.9 percent), Sweden (66.9
percent) and Slovenia (62.8 percent), whereas the least forested are
Malta (1.1 percent), Ireland (9.7 percent) and the Netherlands (10.8
percent) (Fig. 2).
[FIGURE 2 OMITTED]
The functions of forests and forestry are economic, environmental
and social (The EU Forest ... 2006).
According to Global Forest ... (2010), 12 percent of the
world's forests are designated for the conservation of biological
diversity (Biological diversity conservation function), 30 percent of
the world's forests are primarily used for production of wood and
nonwood products (Productive functions), 8 percent of the world's
forests gave soil and water conservation as their primary object
(Protective functions). There is increasing management of forests for
social and cultural functions (Socio-economic functions). Forestry
provides also for the stewardship of scenic and cultural values, as well
as other functions, such as traditional collection of mushrooms and
berries, hunting and tourism. In addition, forests are very important in
supplying social and recreational services, because people have
traditionally close links to them.
On a global average, more than one-third of all forests is primary
forest, i.e. forest of native species where there are no clear visible
indications of human activities and the ecological processes have not
been significantly disturbed. Primary forests include the most
species-rich, diverse terrestrial ecosystems (Global Forest .2010).
Forests produce a broad variety of goods and services. The forest
sector is one of the most important economic sectors within the EU
Forestry and forest-based and related industries comprise the following
industrial sectors: woodworking, cork and other forest-based materials;
pulp, paper and paper-board manufacturing; paper and paper-board
converting, and printing industries.
The forest sector has great potential to further develop
high-quality and value-added products and services for the diverse and
growing demands of society based on a renewable raw material source.
The EU is one of the biggest traders and consumers of forest
products in the world, with a positive trade balance overall.
Western Europe has a major competitive advantage in the production
of highly processed products such as reconstituted panels and
high-quality paper (State of the World's ... 2009: 26). It is
expected that Western Europe will remain the largest producer of all
forest products in Europe, accounting for 78 percent of paper
production, 63 percent of wood-based panel production and 48 percent of
sawnwood production in the year 2020 (Branch 2005: 241).
Forests are an important source of raw materials for forest-based
industries. They also provide energy, both directly and indirectly, and
a host of non-wood forest products and services, including grazing and
forage for domestic and semi-wild animals. Forests offer many goods and
benefits in addition to forest products, because they provide important
environmental functions, such as the conservation of the natural
heritage and the protection of water and soil.
The area of planted forest is increasing and now accounts for 7
percent of total forest area. Afforestation and natural expansion of
forests in some countries and regions have reduced the net loss of
forest significantly at the global level. The net change in forest area
in the period 2000-2010 is estimated at 5.2 million hectares per year,
down from 8.3 million hectares per year in the period 2000-2010 (Global
Forest... 2010).
Deforestation can play a role in both global warming and cooling,
and it also leads to reductions in biodiversity, disturbed water
regulation, and the destruction of the resource base and livelihoods for
many of the world's poorest.
Felling in Europe have been lower than the growth in forest
resources and have actually declined over several decades. In the
future, the ratio of fellings to increments is expected to increase as
more wood is harvested to supply the wood industry, as well as
reflecting the impact of fast growing demand for wood as a source of
renewable energy (State of the World's... 2009: 25).
Generally, the use of forest resources for different purposes
should be balanced (Communication from the Commission. 2008).
3.3. International praxis: world's forests ownership
In order to achieve effective governance, we need to involve both
public and private sector organisations, enterprises, the science
community and civil society, who all have interest and stake in forests
(Vanhanen et al. 2007).
There is a great diversity of natural forest types, forest cover
and ownership structures. Generally, there are three types of forests
ownership (Fig. 3):
1) Private ownership refers to land owned by individuals, families,
private co-operatives, corporations and enterprises, private religious
and educational institutions, pension or investment funds or other
private institutions. Private owners may be engaged in agriculture or
other occupations (including forestry).
2) Public ownership refers to land owned by the State (or region),
state-owned institutions or corporations or other public bodies,
including cities, municipalities, villages and communes (including
ownership by tribal or other indigenous peoples).
3) Other ownership refers to land that is neither
"public" nor "private". It includes land for which
ownership is unknown or un-defined (Forestry Statistics 2009).
Despite the changes in forest ownership and tenure in some regions,
most of the world's forests remain under public ownership. 80
percent of the world's forests are publicly owned, but ownership
and management of forests by communities, individuals and private
companies are on the rise. Differences among regions are considerable.
North and Central America, Europe (other than the Russian
Federation), South America and Oceania have a higher proportion of
private ownership than other regions (Fig. 4). In some regions, there is
an increasing trend of involving communities, individuals and private
companies in the management of publicly owned forests (Global Forest ...
2010: 10).
In Western Europe, 70 percent of forests are privately owned, often
by individuals or families. In Eastern Europe, large parts of state
forests were returned to their former owners in the 1990s, which
increased the proportion of forest under private ownership. In many
countries, the private sector has responded by forming strong private
forests owners' associations and cooperatives. In CIS (Commonwealth
of Independent States) countries, all forests are state owned (State of
the World's ... 2009: 25).
A number of researchers have analysed the various aspects of
forests ownership or management in different countries. For example,
Yrjola (2002) presented the Forests management guidelines and practices
in Finland, Sweden and Norway. Vihervaara and Kamppinen (2009) analysed
Finnish forest industry, Liao and Zhang (2008) compared industrial and
nonindustrial forest ownership , Diaz-Balteiro et al. (2009) researched
the forests management in Spain, etc. The question of forest ownership
is raised about different world regions: Japan (Yamashita et al. 2009),
United States of America (Zhang et al. 2005), Europe (Wiersum et al.
2005; Schmithusen and Hirsch 2009), etc.
[FIGURE 3 OMITTED]
[FIGURE 4 OMITTED]
There is no accepted general model of forest ownership structure in
EU. It was recognised the importance of public and private forest owners
within the European Union and the wide variety of ownership types
(Communication from the Commission ... 2005). Each EU Member State has a
national model of forest ownership structure (Fig. 5).
The increases in the number of private forest owners need to be
seen in light of the overall changes in ownership structure. About 35
percent of forests and other wooded land in the EU-15 were in public,
and about 65 percent in private ownership. However, with the accession
of the new Member States, the proportion between areas of publicly and
privately owned forests has changed.
According to European Commission ... (2010), about 40 percent of
forests and other wooded land in the European Union are in public and
approximately 60 percent in private ownership. However, the situation in
each Member State is different. The countries can be divided into three
groups according to the dominance of forests ownership structure:
1) Dominance of public ownership (more than 60 percent of forests);
2) Dominance of private ownership (more than 60 percent of forests); 3)
No dominance of public or private ownership (balanced ownership) (Fig.
6).
For better understanding of the existing ownership system, there is
not enough to have a general look. Due to various changes, the
statistics for various years and countries are not comparable. Different
surveys arrive at different result with regard to forest land area.
There are minor differences between the definitions of ownership
categories that are used with various statistical compilations.
[FIGURE 5 OMITTED]
[FIGURE 6 OMITTED]
Each country should be analysed separately taking into the account
a lot of factors with historical component.
For example, total forestry land in Finland is 26.3 million ha or
86 percent of the land area, of which 52 percent is under
non-industrial, private ownership (individuals, heirs, private firms,
etc.). The State owns 35 percent and forest industry companies own 8
percent. The remaining 5 percent represents forests under municipal,
parish, shared or joint ownership (Finish Statistical ... 2009: 429).
"Metsahallitus" is a state enterprise that administers
more than 12 million hectares of state-owned land and water areas
(Metsahallitus 2010). The Forestry Development Centre Tapio, which is
subordinate to the Ministry of Agriculture and Forestry in Finland,
provides development and expert services supporting forest policy
planning and implementation for all organisations involved in forestry
(Metsahallitus 2010).
In Finland private forest holdings are mostly in the hands of
families. Private forests produce over 80 percent of round wood
purchased annually. The Finnish forest industry is highly
export-oriented, and in most sectors of the industry, 70 percent to 90
percent of production goes abroad. Finland is a major exporter of sawn
softwood and paper, particularly graphic papers (Finish Statistical ...
2009).
The total area of the Swedish forest is 22.7 million hectares
(EUROSTAT 2010). The total area of non-productive land is 5.8 million
hectares. In year 2008 there were 329300 forest owners. The distribution
of forest by ownership category in Sweden is: 56 percent--private
(individual and other) owners; 17 percent--state-owned and state-owned
corporations; 2 percent--other (public and other) ownership, 25
percent--private-sector corporations. "State" in this context
refers to national agencies, foundations and other institutions whose
functions include managing state-owned forest properties. Corporations
of which more than 50 percent of the shares are owned by the state
belong to the category of state-owned corporation (Swedish Statistical
... 2009: 29). In Sweden, State forests are managed by one enterprise
("Sveaskog").
Generally, findings are that private land ownership produces
proportionately much more than its share of market commodities that are
traded in private markets, most notably timber (Siry et al. 2009: 9).
Otherwise, state forest organizations play a leading role in forest
management (State of the World's ... 2009: 25).
There is a need for better information exchange on the forest
sector in Europe (Wardle et al. 2008). Forest restitution processes,
which took place in the new Member States, still continue in some cases.
Taken together, comprehensive information is crucial for the development
of policies for state and private forestry, and for European forestry in
general.
The changing situation every year and the lack of good praxis
examples create a need for new researches.
3.4. Forest ownership in Lithuania
The forest is one of the main Lithuanian natural resources, serving
the public well-being of citizens, protecting the stability of the
landscape and environmental quality (Lietuvos misku ... 2002).
Lithuanian forests land area occupies 33.1 percent of Lithuanian
territory in 2010 and forest coverage has a tendency to increase (Fig.
7) (Department of Statistics ... 2010). Forests are a land area not less
than 0.1 hectare in size covered with trees, the height of which in a
natural site in the maturity age is not less than 5 meters, other forest
plants as well as thinned or vegetation-lost forest due to the acts of
nature or human activities (Lietuvos Respublikos misku ... 1994).
According to Lietuvos misku ... (2002), Lithuanian forestry
vision--a modern, market-oriented branch with rational use of forest
resources and seek to increase it, with developed infrastructure and
skilled workers, applying advanced technologies, creating jobs and a
pleasant environment for living.
The strategy identifies the most important forest policy measures
for the period up to 2015 and includes 12 strategic objectives: the
conservation and enhancement of forest resources; forest ownership
diversity; public participation in the decisions making process; public
awareness about the country's forests; development of forestry
science; strengthening of international relations; smart use of forestry
resources and increase of productivity; forestry economic efficiency;
sustainability of forest ecosystems; biodiversity and forest health; the
satisfaction of general public related needs, state and private forestry
development in the context of general rural development.
The Lithuanian state is an important owner of commercial assets in
the country. The State either directly or indirectly controls or has
minority share stakes in a number of industries--energy, transportation,
forestry, and other (Annual Review ... 2009: 6).
According to Lietuvos Respublikos misku ... (1994), forests can
belong to the state or people (individuals and legal entities).
State's mission is to ensure diversity of ownership of forests
and the effectiveness of forestry state regulatory system (Lietuvos
misku ... 2002).
The total area of stands in Lithuania is 2 million ha, of which 0.8
million ha is private forest, 1 million ha belong to the State and 0.2
ha are reserved for property restitution (Annual Review ... 2009) (Fig.
8).
[FIGURE 7 OMITTED]
The ownership structure of Lithuanian forests is changing during
the land (forest) reform (Fig. 9). For example, in 2002 there was about
26 percent of private forest of the total forest area of the country. It
is expected that after land reform private forests will be about 40-45
percent of country's forest cover (Lietuvos misku ... 2002).
National forests are managed by the Directorate General of State
Forests at the Ministry of the Environment. It manages 42 state forestry
enterprises (Uredijos), which are further subdivided into 642 units. The
average number of people employed by 42 state forestry enterprises was
close to 4000 in 2009 (Annual Review ... 2009: 21).
Forestry is an important branch of the Lithuanian economy (Fig.
10). The wood, paper products and furniture industry (hereinafter the
"wood industry") has been growing for a long time. In
2000-2006, its value added at constant prices was rising by 18 percent
on average annually (Lithuanian Economic Outlook 2009: 91).
Lithuania is a net exporter of round wood. The bulk of the
production is exported to Sweden, Poland, Finland and Latvia, while most
of the imports come from Belarus, Ukraine and Russia (Annual Review ...
2009: 21).
[FIGURE 9 OMITTED]
The added value of the Lithuanian forest sector is about 2.6
percent of Gross Domestic Product (GDP) in 2009. Forest sector is an
important branch in labour market. Nearly 30 percent of the total
forestland area is designed for ecological functions.
The State is a major owner of forest and forest land in Lithuania,
owning approximately 1 million ha. State forestry enterprises are
obliged by law to pay 5 percent of the income received from the sale of
round wood and standing forest to the State budget. The income is
intended to be used to satisfy the general needs of forests. Moreover,
in May 2009, the government introduced an additional 5 percent payment
to the State budget, which is used for general budget purposes. Despite
the whole sector operating profitably, cost of capital is not accounted
for. The state is not receiving an adequate return for capital employed
in the forestry sector and the forestry sector is not creating value for
its owner (Annual Review ... 2009: 22).
Public forests could give more benefit. State-owned enterprises in
Eastern Europe are often a mess (State industries ... 2010: 29).
State industries ... (2010: 29) indicated that a glaring example of
mismanagement comes from the forestry industry in Lithuania.
Lithuania's state-owned forests are run by 42 companies, but the
average yield in 2008 was only a quarter of the Swedish figure and even
that trickles away into company costs: the state receives no dividend.
There is a need to compare and examine the costs and benefits (both
social and private) of different policies (Zhang et al. 2005: 452).
Valstybinio audito ataskaita (2010) stated that "activities of the
most forest enterprises, which manage public forests, and of the
Directorate General of State Forests coordinating their activities are
not sufficiently effective".
The audit report evaluating the effectiveness of the management of
State-owned forests points out that the Lithuanian Forestry Policy and
its Implementation Strategy has not been updated since it was issued in
2002, therefore it does not take into account substantial changes in
Lithuanian economy, which have occurred during the last eight years.
Furthermore, as Government institutions still have not made the final
decision on the optimum number of forest enterprises, the objective of
the Strategy is not yet implemented: to reorganize and optimize State
regulation system of public forestry (Valstybinio audito ataskaita
2010).
Generally, from the ownership standpoint, the problem is that
Forestry-industry isn't effective in Lithuania. Valstybinio audito
ataskaita (2010) noted that Lithuanian forest enterprises use their
resources with different effectiveness, therefore the price of timber
sold by different forest enterprises differs by more than a third, and
costs of its preparation differ by up to 42 percent.
According to Lietuvos Respublikos misku ... (1994 Article 2), The
Directorate General of State Forests under the Ministry of Environment
shall conduct the economic management of state-owned forests attributed
to state forest enterprises, shall organise and co-ordinate restoration,
maintenance, protection and utilization of forests and forest resources.
The mission of the Directorate General of State Forests is to
enhance the ecological, environmental, economic, recreational and other
socially important values of state forests as the most important
components of the whole state forestry by managing them in accordance
with the principles of sustainable forest use and by rational use,
restoration and enlargement of forest resources (Lietuvos Respublikos
misku ... 1994 Article 2).
Generally findings of the analysis are that Lithuanian forest cover
is relatively low compared to some of the EU countries (Finland, Sweden,
Slovakia, Estonia), but it has a tendency to increase.
State-owned ownership of forests is dominating in Lithuania.
Lithuania has a relatively high number of public bodies that manage
forests--42 enterprises, while the more forest-rich countries in EU have
fewer bodies (one or more). For example, state forests are managed by
one enterprise in Sweden ("Sveaskog") or in Finland
(Metsahallitus 2010). Latvian state forests are supervised by 2
companies (AB "Latvijas valsts mezi" and "Valsts meza
dienests"). In Estonia, where the state forest area is similar to
Lithuanian, one company--State Forest Management Centre (RMK) manages
the state forest.
The forestry sector in Lithuania lacks transparency. In most EU
countries trading is centralised. The trading is not centralised in
Lithuania and all 42 state forestry enterprises are engaged in trading
of wood in Lithuania. This is a disadvantage compared with the usual
model in most EU countries, where trading is centralized (Annual Review
... 2009: 23).
The number of employees employed by 42 state forestry enterprises
averaged to 3846 in 2009 (or one employee per 234 ha of forests under
management in Lithuania versus one employee per 4488 ha of forest under
management in Sweden) (Annual Review... 2009: 23). Valstybinio audito
ataskaita (2010) pointed out, that Lithuanian forest enterprises employ
2060 professionals (without workers), while in Latvia in the same job
there are 2150 professionals ("Latvijas valsts mezi" and
Latvian State Forest Service), despite the fact that Latvia has 21,4
percent more forest area than Lithuania has. The State Forest Management
Centre (RMK) in Estonia employs 1118 workers--two times less than the
Lithuanian 42 enterprises. Sweden has more forests, but Sweden AB
Sveaskog and State forestry agency employs 2058 professionals. The
figures show that the average forest area for one employee in Lithuania
is less than in other countries.
4. Perceptions of future sustainable competitiveness resources
4.1. Forest policy in the European Union
The forest policy in the European Union is developing step by step.
Nevertheless, Member States have the right to state their own policy in
compliance with EU policy. For example, there is no accepted general
model of forest ownership structure in the EU and each EU Member State
has a national model of forest ownership structure.
The growing concern about the coherence between the forest policies
of the Member States and forest-related activities at the EU level, as
well as the rising profile of forests in international policy debates
and initiatives on sustainable development, were the main driving forces
behind the adoption of the EU Forestry Strategy (Council resolution
1998).
It was recognised the importance of private forest owners within
the European Union and the wide variety of ownership types
(Communication from the Commission ... 2005).
It was confirmed the economic, social, and environmental importance
of the forest sector in the EU and the multiple benefits that
sustainable forestry provides to society.
The overall objective of the EU Forest Action Plan (2007-2011) is
to support and enhance sustainable forest management and the
multifunctional role of forests. The Action Plan provides a framework
for forest-related actions at Community and Member State level and
serves as an instrument of coordination between Community actions and
the forest policies of the Member States (Communication from the
Commission ... 2006).
The Lisbon Strategy (Presidency Conclusions. Lisbon ... 2000)
objectives of sustainable economic growth and becoming the most
competitive and dynamic knowledge-based economy in the world, were
compatible with the Gothenburg objectives of safeguarding the quantity
and the quality of the natural resources base.
The forest sector can substantially contribute to the sustainable
development of the society and to the quality of life. The challenge is
to improve competitiveness, while practicing sustainable forest
management, diversification of outputs and valuation of the services
provided by forests to society.
Significant progress has been made in developing forest policies,
laws and national forest programmes. Of the 143 countries that have a
forest policy statement, 76 countries have issued or updated their
statements since 2000. Of the 156 countries that have a specific forest
law, 69 countries--primarily in Europe and Africa--reported that their
current forest law has been enacted or amended since 2005. Close to 75
percent of the world's forests are covered by the national forest
programmes, i.e. a participatory process for the development and
implementation of forest-related policies and international commitments
at the national level (Global Forest ... 2010: 9).
Another notable development has been institutional and
administrative changes in the way that governments act within the
sector. Some countries have partially privatised state forest assets
and, in Eastern Europe, the restitution of forests to their previous
owners has created a vast number of small private forest owners.
Furthermore, where significant areas of forest remain in public
ownership, many governments have encouraged their public forest managers
to act more like private forest owners by setting clear commercial
targets and more clearly separating the different roles of the forestry
administration (i.e. policy formulation, policy implementation and the
management of public forests) (Branch 2005).
According to the EU strategy Europe 2020 (2010), EU Member States
should decouple economic growth from resource use, turning environmental
challenges into growth opportunities and making efficient use of their
natural resources.
The EU has adopted an ambitious energy and climate policy which
aims by 2020 to reduce energy consumption by 20 percent, with a similar
cut in CO2 emissions, while raising the share of renewables in the
EU's energy mix to 20 percent (the "20/20/20"
climate/energy targets). One of the seven flagship initiatives of the
European Commission is "Resource efficient Europe".
It is generally recognized, that natural resources provide many
benefits to society and to the economy and play an important role in the
preservation of natural biodiversity and the mitigation of climate
change. The quality of our ecosystems--namely air, water, soils and
forests--should be ahead of negative impact of climate change.
4.2. Aspects of future forest ownership role for sustainable
competitiveness in Lithuania
Lithuania is in the 53 place according to The Global
Competitiveness Index (2009-2010), provided by the World Economic Forum,
covering 133 countries (Schwab 2009), or in the 31 place (2009)
according to the annual World Competitiveness Yearbook, published by The
Institute for Management Developments (IMD), with coverage of 59
economies (Garelli 2009).
Political topicalities and public discussions about the ownership
and management of Lithuania's state forest create the need for
searching the optimal ownership structure and raise of questions about
the future competitiveness resources in Lithuania.
There are two different positions in the society about the state
forests management: one suggestion is to privatize state forests; the
second opinion is that state forests should be saved in the state
ownership with the optimized existing management system.
Generally, a comparison with other regions shows the remaining
potential for productivity growth.
The wood sector is able to compete successfully on foreign markets
as reflected in the large surplus of foreign trade in the relevant
products. The development of this national sector will rely heavily on
the speed of modernisation processes and success in securing additional
supplies of raw materials from abroad as well as in optimising the use
of local resources. In this area, the government plays a key role. In
addition, the industry is an important component of the production
sector even in well-developed countries (such as Denmark, Finland,
Italy, etc.) (Lithuanian Economic Outlook 2009: 94).
There are possibilities to reduce costs by increasing efficiency in
the sector (e.g. following the example of the Nordic countries, which
have expensive labour and raw material costs, but remain competitive
through system optimisation) (Garelli 2009: 218).
Building on the different experience at EU level, the decisions
about forest ownership and management in Lithuania should be based on a
shared vision of the long-term and global challenges. It is suggested to
take into the account the variable factors.
The wood industry has acquired vast experience in Lithuania and
forestry is an important branch of the Lithuanian economy.
Lithuanian forests--a bridge towards a renewable future. Firewood
and timber, including the purveyor of waste wood and wood wastes (bark,
needles, sawdust, sawdust briquette), reeds, straw and other
agricultural waste are dominated by the production of renewable energy
resources of Lithuania in the balance sheet.
The comparison of Lithuanian and other countries forest ownership
should bear in mind the different richness of all natural resources.
The total forest area in Europe is expected to increase by around
five percent between 2000 and 2020. This will occur due to a mixture of
afforestation and natural processes and will occur both on former
agricultural land as well as along the tree margin in mountain and
boreal areas. However, the area available for wood supply might
decrease, due to increasing demands to set-aside forests for other
functions, such as: biodiversity conservation; recreation; and
protective functions (Branch 2005). Otherwise, it is important to have
quantity as well as quality.
The productivity of state-owned and private-owned forest should be
analysed and compared.
On the one side, the challenge for the future will be for the
forest sector to adapt and evolve to remain competitive in the changing
policy environment.
On the other side, short-term economic goals have to be juxtaposed
and reconciled with long-term ecological milestones in corporate
environmental strategy planning (Vihervaara and Kamppinen 2009: 92).
Naturally the transition to a green economy requires strong demand and
willingness to pay for forest environmental services.
The forest sector requires relatively little investment to obtain
significant revenues from exports of wood raw materials and primary
processed products. Lithuania could have a challenge to export products
with higher added value--future drivers of sustainable competitiveness.
Despite the importance of economic factors and a need for higher
forest sector productivity and profit, "soft" factors should
also be taken into account before making the decision about state
forests management. Regardless of forest ownership, the forest is
primarily a national asset that must be preserved for future
generations, allowing the environmental, economic and social needs of
society (Lietuvos misku ... 2002).
The state's mission could be to save the ecosystem, living
environment and historical Lithuanian image of "green"
country--to save forests in the state-ownership. Generally, there is a
need for research initiatives to evaluate the state forest role,
challenges and opportunities for the competitiveness in the context of
sustainable development in the long prosperity.
5. Conclusions
The changing policy context, growing role of sustainable
development, the transition to a green economy and the new European
Union strategy for smart, sustainable and inclusive growth (Europe 2020,
2010) call for the "rethinking" of the main drivers of the
sustainable competitiveness in the long prosperity and the future
competitiveness leadership.
Despite the accepted importance of the forestry sector for
sustainable development, there is a significant lack of information on
forests ownership in Europe.
Recognising a wide range of natural, social, economic and cultural
conditions and differences in ownership regimes of EU forests, it is
expected that growing forest could become the source of growing future
sustainable competitiveness resource in Lithuania.
Forest resources in Europe are likely to continue expanding (State
of the World's... 2009: 26). Lithuanian forest cover (33.1 percent)
is relatively low compared to some of the EU countries (Finland, Sweden,
Slovakia, Estonia), but forest coverage has a tendency to increase.
There is no accepted general model of forest ownership structure in
EU and each EU Member State has a national model of forest ownership
structure. Countries can be divided into three groups according to the
forest ownership structure with dominance of public ownership (Estonia,
Poland), private ownership (Finland, Sweden) or without dominance of one
type of ownership (Germany, Netherlands). Despite changes in forest
ownership in some regions, most of world's forests (80 percent)
remain under public ownership. The State also is a major owner of forest
and forest land in Lithuania. From the forests ownership standpoint, the
problem in Lithuania is that the existing management of state-owned
forests is not effective. Lithuania has a relatively high number (42) of
public bodies that manage forests, while the more forest-rich countries
in the EU have one body (Sweden, Finland). The trading is not
centralized in Lithuania, in contrast to the most EU countries. The
average forest area for one employee in Lithuania is less than in other
countries. The comparison with other regions shows the remaining
potential for the productivity growth.
The different theoretical views and research in the scientific and
legal literature on the topic of forest ownership present different
approach to the ownership structure. Two contrary opinions and
suggestions are in the Lithuanian society about the state forest
management: to privatise forest or save state-owned forests.
Building on the different experience at EU level, the decisions
about forest ownership and the improvement of management in Lithuania
should be based on a shared vision of the long-term and global
challenges, so as to develop clear objectives and implement them using a
coherent and balanced approach to sustainable development and forest.
Public forests could give more benefit after the improvement of its
management without changing the main owner: state forests should stay
state-owned. Lithuania's challenge is to save forests growth and
use forests as the future competitiveness driver in the context of
sustainable development.
The findings of this article could be led by further research of
natural resources role in the context of competitiveness and sustainable
development and the impact on future sustainable competitiveness.
doi:10.3846/jbem.2010.31
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Audrone Balkyte (1), Kestutis Peleckis (2)
(1,2) Department of Economics and Management of Enterprises,
Vilnius Gediminas Technical University, Saul?tekio al. 11, LT-10223
Vilnius, Lithuania
E-mails: (1)
[email protected];
[email protected]; (2)
[email protected]
Received 5 February 2010; accepted 27 August 2010
Audrone BALKYTE. Doctoral (PhD) student of social science
(economics). Department of Economics and Management of Enterprises,
Faculty of Business Management, Vilnius Gediminas Technical University
(Lithuania). Research interests: economic growth, sustainable
competitiveness, sustainable development.
Kestutis PELECKIS. Associate Professor, Doctor of social science
(economics), Department of Enterprise Economics and Management, Vilnius
Gediminas Technical University (Lithuania). Author of more than 70
publications. Research interests: increase of efficiency of functioning
and development of social and economic systems.
Fig. 8. Forest land by type of
ownership in Lithuania in 2008
Source: Annual Review ... (2009: 21)
Reserved for restitution 12%
State forests 49%
Private 39%
Note: Table made from pie chart.
Fig. 10. Sales of wood, paper products and furniture in Lithuania
(LTL million)
Exports Domestic sales
2002 1753 737
2003 2111 892
2004 2185 1381
2005 2409 1590
2006 2726 1960
2007 3098 2535
2008 3172 2632
Source: Lithuanian Economic Outlook (2009)
Note: Table made from bar graph.