WP 5 plans an improved voluntary monetary compensation mechanism for forest owners. A new mechanism boosts forest biodiversity protection and complements current conservation means (the existing Metso compensating scheme for biodiversity compensation) by allowing the forest owners to get compensation also for carbon storage/sequestration. The methods are active work with stakeholders, stakeholder survey, theoretical modelling, microeconomic simulation and econometric analysis.
WP 5 provides concrete suggestions 1) for the compensation scheme that is ecologically and economically feasible as well as socially accepted in Finland and 2) for adapting the mechanism to the Finnish forestry framework. WP 5 develops the incentives for biodiversity conservation in synergy with other targets for forest sector, such as promoting the bio-economy-based growth and climate smart forestry. A new compensation system is developed through participatory approach (together with WP 7) to suit for Finnish conditions and to be incentive and well-received among all relevant stakeholders and reasonable from the administrative angle.
WP 5 builds an integrated compensation model for biodiversity and carbon and tests with an economic simulation model the effects of its features, stacking and bundling of targets, on efficiency of conservation, type of payment, size and type of compensation and the best mechanism to promote both biodiversity and carbon goals. Stacking refers to producing several environmental benefits at the same time, and the bundling of targets refers to the possibility of conserving BD jointly in adjacent forest areas instead of enrolling single forest areas.
WP 5 explores stakeholder preferences for joint compensation of biodiversity and carbon in Finnish forests. Surveys to forest-owners, administration and regional forest authorities and companies reveal 1) factors affecting the social acceptability of compensation mechanism, 2) opinions on the suitability of the new compensation mechanism to the current institutional setting and 3) attitudes to voluntary use of compensation.
WP 5 assesses a new compensation mechanism: 1) its potential for improving biodiversity conservation, 2) its potential for helping to reduce GHG emissions in Finland and 3) its compatibility with the EU climate policy targeting LULUCF.