Background

Forests provide numerous goods and services for the benefit of humans. Although various of these goods and services are not marketed, they are still of great value to the society. For example, forests play an essential role in water resource management from local to watershed level; they prevent erosion and reduce air pollution; forests are crucial for the preservation of biodiversity as many species under pressure depend strongly on forest habitats; forests' ability to store and sequester carbon is crucial for the mitigation of climate change effect. In addition, forests form an important part of landscape amenities, cultural heritage, and are of great value as sites for recreational activities.

Research and policy process evidence suggest that in most European countries, we are likely to face an increasing demand for these goods and services. Yet, methods for assessing the value of often jointly produced goods and services in an integrated way are still missing, as is a detailed understanding of the distributional patterns, i.e. who actually benefits from their provision. Furthermore, it remains a problem that the goods and services in most cases must be considered externalities resulting from the production of marketed forest goods. This is problematic because as forest owners do not receive monetary rewards for the provision of externalities, they are likely to opt for forest management regimes that do not enhance the provision of externalities in amounts that are social desirable. Therefore, there is potential for increasing the societies' welfare if adequate mechanisms are developed and applied to enhance their provision. However, these mechanisms have to be adapted to the characteristics of forests and the provided forest externalities, forest owner structure and preferences, and socioeconomic contexts of the area.