Creating markets for forest ecosystem services

The researchers in the project are investigating how entrepreneurial actors, both within start-ups and in corporate and governmental contexts, use innovative technologies and business models to create markets for ecosystem services.

Forests provide immense value to humanity, not only via traditional logging and commercialization of forest products, but also through vital environmental functions such as carbon sequestration and biodiversity support. However, as public goods, these ecosystem services hold significant value that is not reflected in market prices and remain largely untraded. As a result, landowners tend to prioritize extractive forestry over service-oriented, conservation-focused approaches.

In response to the current environmental crisis, it is important to highlight the contribution made by forests to climate change mitigation and biodiversity conservation. Payment for Ecosystem Services (PES), which includes carbon trading and bio-credits, provides a market-based mechanism to compensate landowners for preserving, restoring, and expanding forests, effectively commodifying and monetizing these invaluable ecosystem services.

Although PES systems have the potential to transform the value creation of forests, the markets remain marginal, underdeveloped, and face many obstacles. Few landowners register their forests in PES programs due to lack of knowledge, high costs and insufficient returns. Additionally, the market is negatively affected by a lack of transparency, exaggerated claims of environmental benefits, and limited accountability. These factors discourage buyers of ecosystem services such as carbon credits and conservation agreements.

This project explores how entrepreneurial actors, both within start-ups and in corporate and governmental contexts, use innovative technologies and business models to creatively address the challenges in the PES market. The aim is to identify and analyze promising PES entrepreneurial initiatives, primarily in Europe, using a range of empirical methods, case studies, and action research.

The researchers’ goal is to understand how these initiatives navigate the complexities of creating new PES markets, thereby establishing a model for future development in the sector.

The researchers believe their findings could significantly accelerate the emergence and growth of a dual-use paradigm for forest management, combining the most advanced materials science with innovative service-based solutions to offer a broader and more beneficial range of options for stakeholders.

The researchers are also of the view that monetizing the ecosystem services of forests can improve the economic viability of the forestry sector, which is crucial for a successful transition to sustainability and for achieving climate neutrality by 2045. This strategy is also seen as a way of promoting rural development and providing valuable economic opportunities for local communities.