SOCIO-ECONOMIC IMPACTS OF AFFORESTATION AND REFORESTATION ΙΝ EUROPEAN UNION

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1 ΕΠΙθΕΩΡΗΣΗ ΟΙΚΟΝΟΜΙΚΩΝ ΕΠΙΣΤΗΜΩΝ - Τ εύχος 14 (2008), SOCIO-ECONOMIC IMPACTS OF AFFORESTATION AND REFORESTATION ΙΝ EUROPEAN UNION Abstract Onc of the basic ai n1s of any forest policy is to increase 1vood production. During the p os t-ιva r pcriod. the developed countries mainly made a significant effort to r a ιi o n a ll y managc and exploit forcsts, and consequently a substantial increase in wood production ca n1e about. H ow eνe r, as people's requirements for 1vood and its products also gre1v in parallel, both the deνeloped and deνeloping countri es implemented ext e n s i νc afforestation and reforestation programmes either for energy purposcs or for the production of industrial 1νοο d. After World War 11. most European countri es carried ο υι important reforestation progran1mes in order to coνer tl1e nccd for 1νοοd and its products. Since there is no Comn1on Forest Policy 1vithin the European U 1ion (EU). the latter's actions in relation ιο the sector l1 aνe only been deνe l o p e d ί 1 1 co njun c ιi o n with other policies, related to agriculture, tl1e e n ν iro nn1 e nt and trade. The Common Agricultural Policy (CAP) reforms in 1992 and 1999 created tl1e preconditions a11d a faνo ura ble fi nancial fr an1e1νor k for the set-aside of some agricultural land that was used for the impl c n1 e n ι a ιi o n of affo r es ι a ti o n prog r a mιn es. The es t ablis hm e nι of forest pl a nt a ιi o n s, particularly in ιn o unt a in o u s and di sa dνan t aged regions of Europe, 1vas a n1ajor contribution to the preserva tion of social stabili ty and the balanced deνelopn1ent of these areas. G. Arabatzis Democritus Uniνersity οι Thrace Κ. Soutsas Technological Educational lnstitute οι Larissa Ch. Goupos Aristotle Uniνersity οι Thessalonίki Περίληψη Η αύξ η ση τη ς ξυλοπαραγωγ ιj ς αποτ ελεί έ ναν από του ς βασ ικ ούς σκοπούς τη ς δασικ ή ς πολιτικιj ς. Τη μ εταπολε μικιj περίοδο καταβλήθηκε κυρίω ς από τις αν επτυγ μ έ ν ες χώρες σημαντ ι κ ι j προσπάθε ι α γ ια την ορθολογ ι κ ιj δ ι α χ είριση και αξιοποίη ση των δασών με συνέπε ι α να αυξ η θεί σημαντικά η ξυλοπαραγωγ ιj, παράλλ η λα όμως αυξ 1j θ η καν και οι α ν θρώπ ιν ες ανάγκες για ξύλο και προϊόντα ξύλου. Γ ια την κάλυψ η αυτών των αναγκών από τι ς αναπτυγ μ έ ν ες χώρες, αλλά και από τι ς αναπτυσσό μ ενες εφαρ μ όστ η καν εκτ ε ταμ ένα προγράμματα δάσωσης και αναδάσωσης είτ ε γ ι α ενεργειακούς σκοπούς είτ ε γ ι α παραγωγή βιο μηχ ανικού ξύλου. Μ ετά τ ο Δεύτ ερο Π αγκόσμιο πόλεμο ο ι περισσότερε ς Ευρωπαϊκ ές χώρε ς εκπόν η σαν σημ αντι κά αναδασωτικά προγράμματα για την κάλυψ η των αναγκών τ ους σε ξύλο και σε προϊόντα του. Ειδικότ ερα στ η ν Ευρωπαϊκ 1j Ένωση επε ι δή δεν υπάρχε ι Κο ινή Δασ ι κ ι j Π ολ ιτι κ ή ο ι δράσε ι ς τη ς στη δασοπονία έχο υ ν αναπτυχθεί μόνο σε συνδυασμό με άλλες πολιτι κές όπω ς είναι η γεωργ ι κ ιj, η περ ι βαλλοντ ι κ ιj και η ε μπορική πολιτικιj. Οι μ ε τ αρρυθμίσεις τη ς Κοινής Αγροτικιjς Π ολιτι κής το 1992 και τ ο 1999 δ ημ ιούργ η σαν τι ς προϋποθέσε ι ς κα ι τ ο ευνο ϊ κό χρημ ατοδοτι κό πλαίσιο για τη ν απόσυρση μέρους των γεωργ ικών εκτάσεω ν και την εφαρμογ ιj προγρα μμ άτων δάσωσης σε αυτές. Η ίδρυ ση δασ ι κών φυτ ε ι ών ε ι δ ικά στι ς ορεινές κα ι μ ειονεκτικ ές περιοχές η1 ς Ευρώπ η ς συνέβαλε σημαντικά στη διατή ρ η ση τη ς κοινων ι κής σταθερότητας και ση1ν ι σόρροπ η ανάπτυξ η τους. J EL Classification: QΙ 8, Q23, Q56, RI Ι, RS2. Key word s: European Union, Affo r es ι a ιi o n. R efo resιaιion. Rocial, Economic l nip ac ι s. 101

2 Γ. ΑΡΑΜΠΑΤΖΗΣ, Κ. ΣΟΥΤΣΑΣ, Χ. ΓΟΥΠΟΣ - ΕΠΙθΕΩΡΗΣΗ ΟΙΚΟΝΟΜΙΚΩΝ ΕΠΙΣΤΗΜΩΝ - Τεύχος 14 (2008), Introduction During the 20 1 '' century, a great nuιη be r of reforestatio n programmes we re implemented in va rious countries by the public sector, fo restry-re lated indιι s tri es and farme rs, both o n fo rest a nd ag ri c ultιιra l la nd. Mo rc spccifically, fo rcst plantatio ns primarily with nιpidl y -g rowin g specics began ιο appcar in co ιιntri cs like So ιιth Ame rica, New Zealand and A ustrali a during the 1920s a nd 1930s. Afte r World Wa r 11, Japan e mbarked ο η a majo r reforcstatio n progra n1n1c with an a nnual ta rget of J millio n ha. At the same time, Ko rea began a simil ar programme, a nd China fo llowed suit a fte r the 1949 revo lιιti o n, in o rde r to increasc its fo rest coverage. Fin ally, many tro pica l countrics in creased tl1c ir pla nting rates after the e nd o f the colo ni al wars (in the 1950s and 1960s). 1 n 1950, the to tal a rea with fo rest pl a ntatio ns in the tropical countries a mo unted to a me re 0.68 millio n ha, most o f which we re teak pl a ntatio ns ίη lndo nesia. The great leap forwa rd in establishing fo rest pl antati o ns in thcse co uιhγi es took place in the la tc 1970s, whe n nume ro us fo rest progra mmes began. The social benefits arising fro m the establishme nt of fo rest pla nta tio ns becan1e in creasin gly imp ort<ιnt p a Γti c ul ar l y in tro pical Asia a nd tro pical Africa. As a result, tl1 e locals pl a ntcd trees o utside forests, o n private fa rn1 s, o n communal ground but <ι l so o n o the r la nd no t designa ted fo r fo rest ιι sc ( Pa ndey a nd Ba ll, 1998). The me mber-states of thc E uro pean U ni o n (EU) have fo ll owed a very di ffere nt historical evolutio n in relatio n to the ir econo mic growtl1 a nd inte rnal econo mi c structure. lt is therefore deemed inevit able tha t, in cach o ne of these countries, fo restry holds <ι di ffe re nt positio n a nd meaning as regards the ir econo my as a whole, as fa r as its p a rticip <ιt i o n ίη thc co untries' G DP, e mployme nt a nd fo Γ e i g n trade is concerned. In EU- 15, there a re millio n ha covered with fo rests a nd fo rested <ιreas ( % of the to tal a rea). O f these, n1illio n ha a re c h <ι r ac t e ri zed as fo rests, 60% of which a re located in Sweden, Finla nd, Spa in <ι n d Germ <l ny. The pro prie ta ry sta tus o f thc fo rests a nd fo rcsted a rehs VH Γi es significantly fro m country ιο country. Ιή ιη οs ι of the EU- 15 co untγi es, fo rests <ι r e privatclyowned. T he IHrgest pe rcentage of privh te fo rests c<l n bc fo und in P o rtu gcι l, A ustria a nd F nι n cc (Table 1 ). Table 1. Countries with the largest percentage of private forests (%) 102 Country P o rtu gcι 1 Austria France Privately-owned Owned by private companies 84 ο 82 ο 74 ο D e nma rk 66 ο Finla nd 64 8 Swede n 48 25

3 G. ARABATZIS, Κ. SOUTSAS, CH. GOUPOS - REVIEW OF ECONOMIC SCIENCES - Νο 14 (2008), Despite the fact that only 3% at the wo rld 's forested areas arc located in EU-15, the latte r ho lds a leading position in the productio n of wood-based prodιιcts a nd in the related global trade, accounting for 38% of expo rts and 37% of iniports respectively. Curre ntly included in the world's top ten cxpo rte rs of forest products are Sweden, Finland, Germany, France and Aιιstria (Papageorgio u and Mantakas, 2004). It is believed tl1 at the accession with re inforce the positio 11 of the EU in tl1 e global market of forest products, due to the fact that many of its new members are characte rized by a significant forestry sector and tradition (MCPFE, 2003). Although the majority of EU-15 countries cannot boast of hav ing "virgin" forests or " forests undisturbed by ma n", there are extensivc areas of forest in thc No rdic countries (over 6 millio n ha) that can be c l1 aracterized as s ιι c l1. Of the total forest cover in tl1e EU-15, 8.5 % are " plantations", i.e. stands of impo rted o r indigenous species that are intcnsively managed, and whose principal a in1 is maximum wood prodιιction. The overwl1e lming majority (85 % ) of forests in EU- 15 a re labell ed " se n1i-ωιtur a l ", which means they are neitl1er " undisturbed by man" nor " pl<ιntations "; this involves a very wide variety of forest types (U N-ECE/FAO, 2000). Forests created from afforestatio ns and reforestatio11s are also inclιιded in this category by a large nιιmb e r of countries that are majo r wood producers. We now observe that the EU accessio n ot the 10 new member-states has not greatly affected the curre nt statc of affairs, sin ce most new membe rs also l1ave a pγ edo minanc e of "sen1i-n atural" forests ( natural forests mainly used for wood production). Fιιrthcrmore, the presence of plantatio ns in the new membe r-states is much lower than in EU-15 (Soutsas et a l., 2006). Ι η most countries of Central a nd Eastern Europe, the forested areas that were cxpropriated by the former poli tical regimes a re now being returned to the ir owners. Thc privatizati on of many sectors of the eco11o my and the rapid development of an indιι stry based ο η the forest and its products are becoming a Γ eh lit y. Over 4 millio n new forest owners, with approxim atcly 2ha of forested l <ι nd ίη their possession, are gai ning experi ence o n the management at fo rest ecosyste ms and market econo my ( K o ιιleli s, 2005). The developn1ent of forests ί of vital inipo rtancc for the EU, whether they are located within its own borders o r belong to countries from wl1ich it impo rts forest products. Thc EU has taken significant m e<ιs ur es to suppo rt the development of forests, particularly in Mcdite rranean regio ns and in developing countries. T11 e acti ons unde rtaken to e nha nce Γorest development ί11 the EU and in devcloping countries basically include: a) agro-forest development, through the st re ngthening of forests on farms, b) an extensio n of" forests and c) the dcvelopmeιlt of an a pprop ri<ιt e professional structure and industrial in frastructure for the promotion of forests ίη developing countries. Morc specifically, tl1ose EU countries with Η negative balance in wood and wood products are pay in g particular atte ntio n to increasing forested areas throιιgl1 the impleme ntatio n of afforestatio n a 1d reforestatio n programmes, 103

4 Γ. ΑΡΑΜΠΑΤΖΗΣ, Κ. ΣΟΥΤΣΑΣ, Χ. ΓΟΥΠΟΣ - ΕΠΙθΕΩΡΗΣΗ ΟΙΚΟΝΟΜΙΚΩΝ ΕΠΙΣΤΗΜΩΝ - Τε ύχος 14 (2008), e ither fo r e nergy purposes o r for industrial wood productio n; they are also focusing on increasing the efficiency o f ex isting fo rested areas in relation to their productive expl oitatio n. 2. Planning and policies 104 Buttoud et al ( 1993) mention that in Europe, and more specifically in France, over 670,000 ha of new fo rests were established during the period Most (58%) of the new forested areas were created on wasteland and ιιnculti va ted areas, wh ile 36% (about 195,000 ha), amounting to 24,000 h a /yea Γ, were the result of afforestatio ns on agricultural land, primarily natural grasslands (75 % ). ln France, most new forests were established ο η wasteland and uncultivated areas, or resulted from tl1e afforestation of agricultural l ιι nd, mainly in regions where the role of ag ricultιιrc was in decline ( Butt o ιιd et ιι l., 1993; 1 FD, ). The afforestatio n efforts ίη Germ<ιny were not of a uniform nature. Major discrepancies can be identified not o nly bctween the forn1er Federal Republic o f Germany (FRG) and tl1c foγmer Germιιn D e m oαa ti c Republic, but also to a great extent within the FRG itself, prior to the reunification. ln recent years, a sn1 a ll increase in reforestations has been observcd in the states of tl1e FRG. The affo r es t <ιι i o n ot agricultural land only represents a small part of the total afforestations and reforestations taking place. The majority of reforestations in Gcrmany are carried o ut o n wasteland and fallow areas (Weber, 1993; IFD, 200 1). Ιη the case of Portugal, various reforestation programmes were implemented from 1938 onwards. These programmes resulted in an increase of forested areas from 2.83 million ha in 1960 to million ha in More specifically, Portugal's programme for the period was financia lly supported by the EU, with the core objective of annually a) establishing 16,000 ha of forest pl antations per year, b) improving 35,000 ha of existing stands, c) constructing l,oookn1 of forest roads and d) taking protective measures from fircs. The main species used for the reforestations were maritime pine, cork oak and eucalyptus species. According to a study by tl1e W o Γld Bank, the land capacity of Portugal suitable for reforestation in 1986 amounted to 2.5 ιηilli o n ha, whicl1 is equal to 82% of the country's forested areas today. During recent decades, extensive reforestations of abandoned agricu ltural lands have bcen taking pl ace using eucalyptus, and so its total expanse now amounts to 0.5 ιηilli o n ha ( 1/3 are mixed pl antations with Pinus radiata). Its production ranges from m3/year/ha ίη coastal regions to 3-4 m3/year/ha in the co ιιnt ry ' s interior, with a rotation period of ΙΟ years (Pereira, 1993; IFD, 200 1). ln Spain, most forest pl antations can be characterizcd as ιιffo r es t a tion s rather than reforestations. During the pcriod , ονe Γ 3.5 million h <ι were planted (Groome, 1993; 1 FD, 2001; Montiel <ι nd Galliana, 2005). According to va rious studies, more than 4 million ha ought to be reforested in order to prevent any further erosio n and another 1 million ha of dry agricultural

5 G. ARABATZIS, Κ. SOUTSAS, CH. GOUPOS REVIEW OF ECONOMIC SCIENCES Νο 14 (2008), land is ίη urge nt need of fe rtility preservation techniques to be applied. The species used for the reforestations ίη Spain we re eucalyptus and pine. The production of wood from e ucalyptus plantations is iniportant both ίη absolute and ίη relativc te rms, since it covers 22% of the total forest production. However, the pl anting of eucalyptus species has bee n rejected so scverely, that any reforestation programmes involving such species are now practically at a standstill (Lopez Arias, 1993). Pette nella ( 1993) states that ίη ltaly, and ίη many other Eιιropean countries, the total forested areas have gradually increased during the coursc of the present century, partly as a result of reforcstation programmes. Such progra111mcs began ίη post-war ltaly ίη 1949, and their main goal was to preserve employme nt ίη mountainous regions and prevent the phenome non of erosion. Jtalian forestry witnessed a significant boost through programme Ν ο 24of 1975 for the region of Mczzogiorno, since its aim was to increase wood production through rapidly growing species. The main specics selected for pl anting we re various species of pine, eucalyptus, white popl ar, poplar hybrid clones and black l ocιιst. poplars cover an area of 79,200 ha ( 1.2% of the total forested area ) with a rotation pe riod of 9-11 years a nd cι n e ι cιnnual increme nt of m3/ha. Poplar wood rep.-esents 25 % of tl1e total ro ιιn dwood prod ιι c ti o n and 40% of the country's indu s ι.-i a l wood. Ι η recent years, tl1ere has becn growing inte rest in high-quality broadleavcd plantations witl1 species sucl1 as \valnut, bird-che rry, as l1, fi eld maple. 1 η the urban region of Ranstad in Ho lland, rcforcstations we re ca πi e d out for the purpose o f wood production and r eαeat i o n. Fιι.-ιherιηore, g.-ea ι a tt e nιi o 11 l1as been paid to e ncouraging tl1e active participation of the political and administrativc a uthorities, and citizcns, as regards the establishmcnt of new forests (Swell engrebel, 1993). ln 198 1, the state sector in lreland refo.-csted about 7,000 ha, whilc the private sector pl anted a total of 275 ha. Coillte, the state-owned forestry company that has since been privatized, pl anted a pprox im <ι t c l y 10,000 ha ίη 1991, while the p.-ivate sector planted aro ιιnd 13,000 ha. The yield from.-ed spruce (wl1ich Γe prese nt s 75 % of the new pl <ι nt a ti o n ), and from othe r conifers is one of the largest in Europe. Nevertl1eless, 75 % of the Ι <ι ηd that is refo.-ested is sold by the lrish farmers to others ί11 advance, before it is planted, so that they c<ι η move to tl1e cities (Bulfin, 1993). According ιο Gillmor (1993), the re fό res tati o n s on priv <ιtc land du.-ing tl1e pe riod <1111oιιnted ιο 28,800 ha, as opposed to the prcvious 55 years, when o nly half that amount was pl<ιnt e d. EU funding has s ub s t a nti <ι ll y re info rced tl1e afforesta tion programmes in Ireland; 24,000 h <ι we re pl <ι nt e d ίη 1995 as opposed ι ο 5,000 ha ίη 1984 (Ο ' Leary et al., 2000). The lrish governme nt's forestry plan th <ι t was pr e p <ι rcd in 1996 includes <ι n <ι nnu a l rate o f affo.-estatio n of 20,000 ha from until 2030 (Mc Carthy et <ι l., 2003). Jn 1805, tόrcs t s in D e nm <ιr k o nly covered 2-4% of its land. ln the carly 90s, forests covcr a bo ut 12% of the country and thc aim o f tl1 e D ani sh governme nt is ιο do uble this figure, so that ίη years forests cover %. Sever<ιl 105

6 Γ. ΑΡΑΜΠΑΤΖΗΣ, Κ. ΣΟΥΤΣΑΣ, Χ. ΓΟΥΠΟΣ - ΕΠΙθΕΩΡΗΣΗ ΟΙΚΟΝΟΜΙΚΩΝ ΕΠΙΣΤΗΜΩΝ - Τ εύχος 14 (2008), laws h<1ve bee n changed ίn order to achievc this goa l, and r cg i o n cι l a uth o Γiti es Ι1 cινe drawn up <ι l <ι nd-pl a nnin g f r <ι n1 ew.o rk for <ιg ri c ιιltur <ι l regions. They have accordingly divided the l a tt e Γ into: a) areas to be used for forcstry, b) areas where tl1 e es t <ι bli s hm e nt of new forests is prohibited and c) intermediate areas. They have <ι \ sο enacted varying subsidy lcvels depending on thc area ίη cιu es ti o n (Jense n, 1993 ). ln nί e di e v a l Grea t Britain, there was cxtensive deforestation which lasted until the end of the \ 9th ce ntιι ry. Ιη the early 20th century, only 5% of Britisl1 soil was covered by forests. This a m o ιιnt increased to 10% ίη the ea rly 90s. ln S co tl <ι nd, forests covercd 14.5 % of the land ίη the beginning of the 1950s, <ιs opposed to 4.5 % in High planting ratcs we re observed dιιrin g the 1960s and Ι 9 7Ο s, both by the pιιb li c <ι nd priva te sector. Thc nί a in species se lected were Scotch pine, Sitka s prιι ce and Shore pine ( M ather, 1993). Hun ga Γy is a E ur o p e<ι n country with some of the newest forests th at were established after W orld W ar 11. From 1946 to 1990, approximately 600,000 ha were affores ted. Tl1i s involved poor marginal <1g ricιιltur a l lands, was t e l <ι nd s <ι ηd Hreas tl1 at required protcction from crosion. As a result, forested areas increhsed from 12% to 18.5 %. W ood rese rves during tl1 at period rosc from 150 million m3 to 285 nίilli o n n1 3 <ι nd the <ιve r age <1 nnu <ι l increment trebled. Of the 600,000 ha, 80% ca mc fιυ m IHnd belonging to <ιg ri c ιι ltu r a l enterprises <1 nd 20% fro n1 fo restry o rga ni z<ι ti o n s belonging to the statc. Experts bclieve th <ι t 1 nίilli o n h <ι of ag ri c ιιltutή I l <ι nd s h o ιιld bc withdn1wn from <1g Γi c ιιltur e in Hιιn ga ry, of which at least 850,000 l1h ch 11 be Hfforcsted, so that the co ιιntry 's forested areas r e<ιc h 2.5 nίilli o n h <ι (K ezesztesi 1993, Solyn1 os 1993). Ι 11 Greece, the period o f productive r e fores t <ι ti o n s, begins after Some of the basic goals of rcforestations in Grcece a Γ e wood pr o dιι c ti o n, the protection of the soil from cros ion, thc r eg ιιl a ti o n of fast fl owing streams, providing e nψl oy m e nt for the nί ο ιιηt <ι ίn ο ιι s p o pιιl <ι ti o n and the development of forcst recrea tion. The sa n1 e period witnesses the import of lt <ι li a n p o pl <ι r clones, the pr o dιι c ti o n of which in pιιbli c <1nd priv <ι t e areas covers Η nί aj o r part of the over<1ll indιι s tri <ι l wood pr od ιι c ti o n. Ι 11 <ι ddit ion, several pr og r <ι mm es l1 ave bee n ca rried out for the genctic improvement of species s ιι c h <ιs the p o pl <ι r, the p l <ι n e <1nd the willow, with the pιιrp ose of producing <ι n improved pl <ι ntin g nί a t c ri <ι l that will help to cover the co ιιntry ' s r e qιι ir e n1 e nt s for wood (A r <ι b <ι t z i s. 2000; Ministry of A g ri c ιιltιιr e, 2002; A r <ι b <ι t z i s, 2003). ln rece nt yea rs, t l1e ag ri c ιιltur e of the EU h <ιs experienced intense res trιι c turin g, the imp <ιc t of which h <ιs not ye t become evidcnt. T11e r e<ιso n s for these c h <ι n ges <ι re r e l <ι t e d to the reform of th c CAP, which was decided in It se rved as the s t <ι rtin g point Γο Γ <1 ncw E ιιr o p eh n policy for rιιr <1 Ι development. for the G A Π <ιg r ee m e nt, thc co ll <ι p se of thc co n1n1ιιni s t regin1es in Central and E<ιs t e rn E ιιro p e and the cxpected enlargements of the E U, the destabiliza tion of the \VO rld m <1rket for ag ri c ιιltur a l pr o dιι c t s and food dιι e to excessive s ιιppl y <ι nd for international competition <ι ηd the CAP reform in 1999 (Z ioga nas, 1999, M attas, 2000; EEC, 2002). A g ri c ιιltur e, t\1 <ι t once employed the maj ority of the <ιc ti ve p o pιιl a ti o n and

7 G. ARABATZIS, Κ. SOUTSAS, CH. GOUPOS - REVIEW OF ECONOMIC SCIENCES - Νο 14 (2008), constituted the basic developme11t sector of countrys ide, now represc 11ts a limited nun1ber of activities, including zo 11es with a low populatio11 de11sity , agricιιlture in tl1 e EU involved 4.5 ο of the worki11g active popιιl<ιtio11, co mp a Γ cd to 7.7% i <ιnd 1988 (EEC, 1997; EEC, 2002). After obscrvi11g tl1 e <ιfo r e- m e nti o 11ed evolutions, the EU proceeded with cι rctό r111 of thc CAP i , which also i11cluded the e n <ιc t111 e nt of the soca llcd " <ιcco 111p a 11 y in g measures", which are relatcd to actio 11s for the prcservh tio 11 a11d protectio 11 of the e11viro 11me11t, s ιιb s idi cs for the HfforestHtio 11 of cιgγicιιltural la11d Hl1d eh rly retireme11t schemes for farmers. Thc fi11a11cia l i11 strume11ts li11ked to the above-mentio11ed actions are regulatio 11 EC/2078/92 (0 11 the exte 11sificatio 11 of Hg ri c ultιιγ e), r eg ιιl a ti o n EC/2079/92 (0 11 ea rly retire111e11t for farmcrs) a11d regulation EC/2080/92 (on the affore tation of agr icιιltιιr a l la11d). Μ ογe specifichlly, regulatio /92 i11volves 111easures αimi11g at s ιιb s idi es for the <ιfforestatio11 of ag ri c ultur <ι l IH11d, which Hre meh 11t to cover thc labour costs whoevcr tl1 e ow11e Γ mhy be (farmers, farmers, Hg ri c ultιιr a l coo p c Γ αt iv es, mu11icipalitics, wc l f<ιre i11stitutio 11s etc.), subsidies for the co11servαtio11 of forest pla11t<ιtio11s. a 1111u cι l Γi11H11ciHI subsidies to compe11sate for loss o f i11co 111c, s ιιb s idi cs fογ <ι 11 y type of improveme11t of forested HreHs 0 11 fhrms (forest ro<ιds, protectio11 fron1 forest fires, wi11dbreaks) (EEC. 1992). ln the co 11tex t of this reform, Γ eg ul H ti o 11 EC/2080/92 sig11ified a rad ica l c h α 11 gc for the ι ores t stratcgy of thc EU. lt was Hscertai11 ed th <lt Γorest ιι se of HgriculturHI la11d provided Hn i11ψ o rt a nt solution botl the level of tl1 c i11di v idιι a l farn1 <ι nd on the level of e<ιc h member-state, si11 cc thc opp0 Γtιι11ity W<lS g ί νc 11 to these <l Γ e<ls to Cιιltίν<ιtC pιόducts Of whίch there WaS Η S h O Γt agc within the EU ( D<ιmi H n os et al., 1997; ArabHtzis, 2000; ArabHtzis, 2005). U11til 31 October 1998, the Hpproved HreHs for Hfforestatio 11 ί11 the EU u11der regulatio 11 EC/2080/92 covered 863,523 l1 a, reprcse 11ti11g 0.65 % of th e t o t <ι l αgricultιιral la11d ί11 use. P o rtιι gα l is the co u11try with the highest perce11thge of <ιfforestatio11 (2.85 % ) of ιι sed cιgric ultur H I la11d, followed ljy Ircl <1 11d (2.2% ) <1 11d SpH i11 ( Ι.3 % ) ; ί11 Swedc11, 0 11Ι y 2 h <ι were afforcsted. The afforested areas ί11 Gι eece H111o u11t to 16,40 1 ha, i. e. 0.50% of the agricultural la11d ί11 use (EEC, 2002). FurthermoΓe, the Hre<ιs afforested by 3 1/ 12/2001 in Grcece accord i11 g to regιιlatio11 EC/2080/92 were e qιι a l to 35,840 l1 a, 98 % of which are cove red wit l1 brσ<ιdlccιvcd pl a11tatio 11s (black locust, walnut, poplar). M ost of thc aπorcsted areas (75 % ) arc located ί11 Norther11 Greece ( Mi11istry of Agricιιlture, 2002). R eg ιιl a ti o /99 on rur<ιl development, which was adopted aftcr thc CAP reform in 1999, represents an effort to coordi11 ate tl1 e various policies Γe l a ted to the agγicu ltur a l sector. Μ ο Γ e specifically, it i11clud es a11d sets out 11ine differe11t m eas ιιre s th <ι t ιι se d to be i11co rporated in other r eg ul <ι ti o n s pγevious l y. 011 e of thesc mcasures p e Γtai11 s to the afforesta tio 11 ot agr i cιι ltιιr α l land, <ιcco Γdin g to article 3 1 of the Γ eg ul a ti o 11. M ore specifica lly, tl1 e funding regime ί11 relatio11 to this articlc covers the afforesta tio11 expc 11ses, an a n11u <ι l 107

8 Γ. ΑΡΑΜΠΑΤΖΗΣ, Κ. ΣΟΥΤΣΑΣ, Χ. ΓΟΥΠΟΣ - ΕΠΙθΕΩΡΗΣΗ ΟΙΚΟΝΟΜΙΚΩΝ ΕΠΙΣΤΗΜΩΝ -Τ εύχος 14 (2008), financial subsidy for the conservation of thc afforcsted areas, as well as an annual f in a nci <Ί I subsidy to compensate for the investors' loss of incon1e (CEC, 1999). 3. The financial aspects and socio-economic impacts of afforestation and reforestation 108 Sedjo ( 1984) carried out economic <Ί n a l yses rel<ίted to industrial forest plantations in J2 different regions of the world (span11in g all co ntin e ιit s). By using a discount r<ίt e of 5%, he ca lcul ated the net present value for species like common spruce, maritime pine, eucalyptus and British Honduras pitch pi11e for different uses (p<ί p er pulp, l1igh-quality sawlo 11g, l ow-q u <Ί lity s<ίw l o 11 g). Only 0 11e pl a11tatio 11, the commo 11 spruce of Sc<Ί11di11avia, had a negative 11et prese11t va lue. The pla11tatio11 with the highest 11et prese11t value was the Southther11 pitch pine ί11 Souther11 Brazil, which is used to produce higl1-q uality saw11wood. 111 tl1 e υκ, la11d is suitable for forestry whe11 the i11ter11al rate of re tur11 of the investme 11t ί11 fo rest pla11tatio11s is at least 6% (Grabtree, J 989). Gr<Ίbtree ct al (J 990) developed a model or dy11<ίmic forest i11vestm e11 ts that takes accou11t of real ti111e Γ efo r es t <Ί ti o 11 s a11d real cas l1 flows. Accordi11g to its results, suitable la11ds for the productio11 ot marketablc wood ca 11 be fou11d ί11 the pe<ίt sites of Norther11 a11d Wester11 Scotland. Gajo a11d Gatto (1990) a 11 <Ί l yzed the co11tributio11 of private forestry to the i11t er 11 a ti o 11 <Ί I rural eco11omy, pri111arily ί11 the disadva11taged regio11s of the Ape1111i11e Mo u11tains. Rece11t studies carried out ί11 these regio 11s h <Ίνe show 11 that forestry is ofte11 prac ticed for reaso11s which a re 11ot purely fi11a11cial. 011e such factor is its co11tributio 11 to the total family i11come a11d its role ί11 providi11g employme11t opportu11iti es to the workforce that would otherwise be left without work. Kul a ( 1990) exa mi11 es the dy11amic effect of rece11t c l1 <Ί 11 ges ί11 the pl<ι11ti11g subsidies regime a11d t<ιxation 0 11 afforestatio 11 progra111111es of tl1 e private sector ί11 tl1c U Κ. Her a 11alys is is based 011 the case of <Ί n <ιc tu <Ί I red spruce pla11t<ιtio11 ί11 Cou11try Tyzo11e ί11 Norther11 lrela11d. Its rcsu lts have sl1ow 11 that the i11 cre<ιsc ί11 pla11ti11g subsidies sig11ifica 11tly improves the fi11<ί11ci<ίi be11efits from such reforestatio11s. si11ce their fi11<111cial retur11 is double that of the previous period. As Pette 11ella ( 1993) me11tio11s, the special progra111me Νο 24 of 1975 ί11 Italy for the Mezzogio r11 0 regio 11 (Souther11 ltaly a11d i s l <ι 11d s) sig11ifica11tly stre 11gthc 11ed the lt<ίli<ι11 forestry scctor, si11ce its m<ίi11 objective was to i11crease wood producti o 11 by est<ιb li s hi11 g pl<ι11t <ι ti o 11 s with rapidly grow i11g species. The progr<ιmme i11vo lved <ι reforestatio11 of 460,000 Ha over a 25- year period, <ι 11d the employme11t of 32,000 workers per year. T11e expe11diture for this programmc was 1,650 bi llio 11 Lir <ι <ιcco rdi11 g to the rate ί (6,900 billio11 ί prices), ofwhich 885 billio11 was provided by the state a11d 800

9 G. ARABATZIS, Κ. SOUTSAS, CH. GOUPOS - REVIEW OF ECONOMIC SCIENCES - Ν ο 14 (2008), billio n fro m othe r bodies, public o r private. The operati onal administratio n o f the programme invo lved the creatio n of a series of forest-related compani es, subsidized by the state. Their a iιή was to provide technical and financial assistance ιο the public and private owners. Majo r incentives were given, since 75 % of the reforestatio n cost was cove red for the first 4 years and the remaining cost was covered by low-interest loans (interest rate 2.5-4% ) ο η condition that thc internal rate of return (IRR) wo uld be at least 7.5 % withoιιt thc state participatio n. Yan M a<ι r e n ( 1993) re po rts that regul ati on EC/797/85 provided the o ppo rtunity to f<ιrmers, farmers' gro ups and state servi ccs ιο proceed with the <ιffo r es t a ti o n o f ag ricιιltur a l Ι <ι ηd. According ιο hin1, the establishme nt and developme nt o f new forcsts is more closely linked ιο regional develo pment, rather than to the changcs ίη tl1e produce of these a r c<ιs. Selby ( 1993) used a multiple linear regressio n model ίη Finland in two very diffe re nt regio ns (one developed and o ne ίη decline). He concluded that poor-quality land is morc likely to be afforested than goo d - qιιalit y land. He also used <ι n o th e r model ιο show that there is a re lation between the rιιr a l structure, othe r socio-economic f<ιctors and the intensity of affo restati ons, both 0 11 <ι local and regional level. Ιη France, Buttoud et al ( 1993) compared the yield from a 30 ha pl ot fo r va rio us alternative uses, using a 5% inte rest rate over a period of 30 years. The net present value ίη the case o f fo rest pl antatio ns amounted to 5,965 ECU/ha and to 6,010 ECU/ha ίη the case of agricultural use. Ιη the UK, the net present valιιe o f vario us pl a nt <ι ti o n types (oak, red spruce, Corsican pine) was calculated for different rotation peri ods, different yield levels and using differe nt cultivating methods. Ιη a ll cases, the net present va lue was negative when the discount rate was 6%. The inte rnal rate of return o f the investments ίη forest pl antatio ns ranged between 4.10%- 9.55% (Whitheman, 1993). Lust a nd Muys ( 1993) report that the EU would be justified in afforesting an additio nal area o f millio n ha for the following reasons: a) there is an impo rta nt surplus of agricultural products, b) there is a shortage of wood products, c) the ν<ι lιι es o f nature and the landscape are gaining in creasing significance <ι ηd d) the need fo r recreation is also growing. For these reason, it wo uld also be expected for society to mostly agree with the po licy for the afforestatio n of agricultural land. However, this is no t the case ίη Belgium, and particularly not ίη the Flanders, mainly bec<ιuse the l oc<ι l ecologists oppose such pla ntatio ns due to the ecological problems they create. Ιη a cost-benefit analysis o f forest pl antati o ns establi shed ίη various regio ns o f Germany, Tho roe ( J 993) observes that the bene fit s from forest use, as opposed to agricultural use, heavily depend ο η the in centives provided by the Common Agricultural Po licy (CAP). This cost-benefit a nalysis calcul ates the impact ο η the agricultural in come, balance of payments, and state budget under a seri es of hypotheses concerning the level of investment funding. A lthough the a m o ιιnt s requircd fin <ι n c in g the establishment and 109

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