The economic impact of forest management certification in Russia : costs and benefits on the corporate level in the north-west region

Abstract: Forest Certification as a non-market tool has generally been thoroughly studied, but theimpacts of Forest Certification have not been examined widely. Particularly very little researchhas been conducted regarding its economic impact. The present study examines thecosts and benefits of forest management certification via interviews with representatives oftwelve forest industry companies operating in the north-west of the Russian Federation. Arange of questions was compiled according to the classification scheme of costs and benefitsbased on literature and discussions with stakeholders before the main interview. Thequestionnaire included structured and open-ended questions. Five companies during theinterview provided more comprehensive information about costs.The classification scheme of costs and benefits on the corporate level has been elaboratedin the research and can be applied in future studies. The study presents comparative tablesand diagrams of costs for the certification process, forest management improvement andovertime by companies for two periods (for the main assessment, including pre-assessmentand annual audit).It was found that certification process costs per hectare are increased by a decrease of certifiedforest area. Improvement of forest management, which has recently been far belowinternational forest management standards, is one of the most visible changes on the corporatelevel due to Forest Certification. Efforts to improve forest management in line withcertification requirements cause complex measures and high costs for companies. The arrangementsimplemented by companies to comply with Forest Certification requirementswere described. The most significant arrangements, which are absolutely new for Russianforest management, are providing loggers with safe equipment, inventory of rare and endangeredspecies, state registration of HCVF, planning on an ecosystem basis and improvementof logging technology to minimise environmental impact. The author found thatthe structure of forest management improvement costs is similar in companies of the samesize. Many of the required arrangements are still in the development stage, which impliesthat the costs may potentially increase.The primary motivation for companies to undergo Forest Certification is the struggle forbuyers.The findings of the thesis broaden the field of research on the economic impact of ForestCertification and provide an overview of the formation of Forest Certification costs andbenefits in businesses in the north-west of Russia.