Two scenarios of the Russian development up to 2020
Prof. Alekseev and Prof. Selikhovkin presents two scenarios from the strategy development
The strategy development for the Russian forest sector
Main challenges for a successful development of the Russian forest sector are related to the availability of funding, to increased production of wood products with high added value, and to the present overuse of accessible forest. During the strategy development for the Russian forest sector in 2008, two scenarios of the development up to 2020 were projected. The first scenario is based on an extrapolation of existing development trends of the forest sector without special government supporting programs, the second is an innovative scenario based on a state support program and a faster economic growth in the forest sector.
The projection points to a doubling of the consumption of paper and cardboard from 2007 to 2020, while the value of furniture consumption will increase five-fold. However, the trade balance in paper, board and furniture has been negative over the last decade and the question is whether Russia can reverse that trend?
The forest sector is minor in the Russian Federation, but crucial in NW Russia
The national gross product of the forest sector was only 1.3% during 2007. Still, forestry is of great importance for the employment on the countryside and, in addition, it is of crucial importance for several regions close to Sweden such as Karelia, Vologda and Arkhangelsk. After the break-up of the Soviet Union, the forest sector has had a negative development and forest management activities have decreased substantially, with the area of final felling reduced to one half and the construction of forest roads to one-third of their levels during the late Soviet period.
Globally, the production of forest products has increased strongly between 1990 and 2010, while the development in Russia has been the opposite even though the country has one of the world’s largest forest resources. The volume of sawn timber has fallen to one third, while paper, paperboard and pulp production has decreased with 10-20%. Plywood production goes against the general trend with an increase of 75% between 1990 and 2007. In 2007, half of the harvested roundwood was processed in Russia, while one quarter was exported and the remaining quarter was consumed domestically as logs or firewood. After the introduction of wood export duties, the export share of roundwood has declined.
Two scenarios for the development from 2007 to 2020
Two scenarios of development from 2007 to 2020 have been projected: Scenario 1 is based on current trends, without governmental assistance programs, and implies investments in the sector at c. 670 billion rubles. Scenario 2 foresees innovative development with the help of a state support program, and implies investments in the sector at c. 1225 billion rubles.
According to the projections, the first scenario would lead to an increase in sawnwood and pulp production by 40%, in paper and paperboard production by 25%, whereas the value of furniture production would be close to doubled. Scenario two would result in a doubling of the production of sawnwood, paper, pulp and board whereas the value of furniture would increase four times.
Today, the areas that have the highest levels of logging activities and where forest industries are most developed are north-western Russia and Siberia, and according to estimates they will continue to deliver the bulk of the raw material. However, the Far East, driven by fast developments in China, is expected to increase its harvesting levels sharply.
Confidence for investment i crucial
Crucial to the successful development under the second scenario is a fast positive global development and improved cooperation between the state and the private sector (e.g. through government investment funds, improved infrastructure for production and exports, tax incentives) which create confidence for investment and hence innovation. The main challenge is to provide a fast expansion of the forest industry. In this context, Russia is studying other countries with a strong performance in the forestry sector, such as the United States, Canada, Germany, Finland and Sweden. Bio-energy was not included in the analysis, but is becoming increasingly important and already attracts foreign investors. One example is the world’s largest pellet plant currently under construction outside St. Petersburg.
Alexander Alekseev and Andrey Selikhovkin, Saint Petersburg State Forest Technical Academy
Use of harvested roundwood in 2007
To industrial processing – 104 mill. m3
Export of roundwood – 49 mill. m3
Local roundwood consumption and fuel wood – 54 mill. m3
Use of industrial timber in 2009
Sawmilling – 34.8%
Pulp and paper production – 29.0%
Wood-based panels production – 9.9%
Plywood production – 6.4%
Export – 19.9%
Forest sector share in 2007
of the national gross product – 1.3%
of total export gains – 3.2%,
of industrial employment – 3.2%
of total investments – 1.5%
Photo: Per Angelstam