The Macroeconomic Implications of the Transition of the Forestry Industry towards Bioeconomy

Abstract

In a global economic system where essential resources are limited, demand is increasing and environmental degradation is more pronounced, the only viable option to ensure sustainable development is to create an environmentally friendly and efficient economy in order to produce more economic value with the same or fewer resources. The aim of this paper is to provide insight into the macroeconomic implications determined by the transition to a forest bioeconomy, with a focus on the impact on the national gross value added. More specifically, this analysis assesses the relationship between the potential of the macroeconomic value creation on the forestry industry and the measures of progress on the transition towards sustainable forest management and long-term economic growth. The analysis refers to a period between 2013 and 2019, summing-up 133 observations, data that were reported by Eurostat for 23 European Union members. We propose a model that describes a construct of the potential of the value creation that can be generated by each country included in our sample, translated into an efficiency score determined using the Data Envelopment Analysis(DEA)methodology. The results highlighted that the evolution of economic, social, and environmental (ESG) context positively impacted the efficiency score. This positive evolution in time was mainly driven by the higher awareness of governments, companies, and people on the need for a transition to sustainable economic growth and sustainable forest management. Furthermore, this study highlights that the transition to sustainable economic growth implies negative changes to the cost structure of the economies, which lead to higher operational costs and lower gross value added. Moreover, our study provides more insight, from an econometric methodology perspective, regarding the synergy effect as determined by the transformation of business models in the forestry sector towards sustainable forest management.