The forest-based bioeconomy in Latvia: economic and environmental importance

From Firenze University Press Journal: Bio-based and Applied Economics (BAE)

Vineta Tetere, Wageningen University

Jack Peerlings, Wageningen University

Liesbeth Dries, Wageningen University

A strong bioeconomy is a priority in recent EU policies, such as the Green Deal and the Bioeconomy Strategy, that strive towards a greener and more resource-efficient economy in the long run (EC, 2012, 2010, n.d.b ). The bioeconomy comprises those parts of the economy that use renewa-ble biological resources from the land and sea — such as crops, forests, fish, animals, and microorganisms — to produce food, materials, and energy (EC, n.d.a). Major societal challenges such as climate change call for a sustain-ability transition away from a fossil-based society toward a bioeconomy, in which energy and manufacturing processes are based on sustainable bio-logical resources (Ronzon et al., 2015; Siebert et al., 2018). In this way, the bioeconomy contributes to the goals of the Green Deal to transform the EU into a modern, resource-efficient, and competitive economy, by reducing the emissions of greenhouse gases, and by decoupling economic growth from resource use (EC, n.d.b). Moreover, by promoting circular and sustainable production systems, the bioeconomy has the potential to contribute to all dimensions and objectives of the European Green Deal (EC, 2020).This focus on the potential of the bioeconomy in EU policy narratives, makes it essential to monitor the bioeconomy and to understand its driving forces. An important step in this is to measure the contribution of the bioeconomy and its dimensions to the total economy of countries. There are ongoing efforts to measure this contribution. However, Bracco et al. (2018) point out that these efforts focus mainly on the economic impor-tance of the bioeconomy in terms of value added and employment, whereas environmental aspects such as climate change mitigation are often ignored. An excep-tion is Lazorcakova et al. (2022) who used input-output analysis to quantify economic as well as environmental indicators to measure the bioeconomy in the Visegrad countries. Despite studies on the economic importance of the bioeconomy, for many countries and subsectors of the bioeconomy, this information is limited or still miss-ing (Wesseler & von Braun, 2017). This is especially true for the forest-based bioeconomy, which encompasses the entire forest value chain, from the management and use of natural resources to the delivery of products and services (Ladu et al., 2020). Lovrić, Lovrić, and Mavsar (2020) observed a high centralization of forest-based bio-economy research in a few countries and organizations from North-Western Europe, while the Baltic countries and the countries in Central-Eastern Europe are not adequately represented. Current research contributes to closing this knowledge gap by measuring the forest-based bioeconomy (FBB) in Latvia. The focus on the for-estry sector is especially relevant for Latvia, where the forest area covers more than 50% of the total territory. This paper aims to determine the economic and environmental contribution of the FBB to the total per-formance of the economy in Latvia. However, measur-ing the FBB is not trivial, as there is no unique defini-tion nor set of indicators, no uniform methodology for the assessment of the bioeconomy, and limited data available, especially for partially biobased sectors (Ron-zon et al. 2017; FAO, 2018). FAO (2018) summarized the methodologies that can be used to assess the bioec-onomy. These methodologies include the value-added/GDP approach, the input-output model, social account-ing matrix multiplier models, computable general equi-librium (CGE) models, partial equilibrium models and the use of various disaggregated or composite indices. Two of these methods dominate the quantification of the bioeconomy: the value added/GDP approach and input-output (IO) models. In the value added/GDP approach, biobased shares of various products are estimated by experts and then sectorial statistics are adjusted accord-ing to these shares (Ronzon et al. 2017; Piotrowski, Carus, and Carrez, 2018). Input-output models build on the concept of biomass flows, namely, that individu-al industries produce biological resources or use inputs from primary biomass producing sectors, and this deter-mines their contribution to the bioeconomy (Grealis and O’Donoghue, 2015; NordBio, 2017). The IO model has advantages over the value added/GDP approach because it automatically includes value added of all industries, and therefore GDP (sum of value added). Moreover, the IO model includes links between multiple producers and products and allows the integration of economic as well as environmental indicators (Gaftea, 2013).In addition to traditional economic indicators (i.e., share in GDP and total employment), this research uses environmental indicators that are connected to climate change. Besides total greenhouse gas (GHG) emissions of carbon dioxide (CO2),met ha ne (CH4) and nitrous diox-ide (N2O) and fluorinated gases (HFC, PFC, SF6, NF3) (see Appendix A), we also include a separate measure of CO2 emissions as the main greenhouse gas. Further-more, CO2 is not only emitted, but also sequestered in forests and harvested wood products. Latvia’s forestry sector has the potential to contribute greatly to this. Therefore, our research objective is to determine the economic and environmental contribution of the forest-based bioeconomy in Latvia.

DOI: https://doi.org/10.36253/bae-13868

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