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Economic Crisis Hits Wood Industry

March 16, 2009

A new U.N. report said on Monday, that the global financial crisis and the collapse of the housing sector are a big blow for wood industries, but this is not necessarily good news for the world’s forests.

In the United States, there were more than half the new housing starts between 2006 and 2008, according to the report that was published ahead of a conference on forestry held in Rome by the Food and Agriculture Organization (FAO).  Several other countries have seen a similar decline, particularly in western Europe.

“Wood demand is unlikely to reach the peak of 2005-2006 again in the foreseeable future,” the FAO’s “State of the World’s Forests 2009″ report said.

“Scaling down of production is widespread in almost all countries and all forest industries, from logging to saw milling to production of wood panels, pulp, paper and furniture,” it said.

Countries such as Brazil and Canada are highly dependent on U.S. markets and have already been severely affected, the report said.  It added that wood fiber demand in North America alone was expected to fall by more than 20 million tons this year.

The FAO said that the economic crisis could reduce investment in sustainable forest management and favor illegal logging, even though lower wood demand should be good news for the world’s disappearing forests.

“A more general concern is that some governments may dilute previously ambitious green goals or defer key policy decisions related to future climate change mitigation,” the report said.

European Union measures to tackle climate change, particularly auctioning emission allowances, were meeting some resistance, and the U.N.’s REDD scheme could face similar problems, according to the report.

The loss of forests worldwide was 18.04 million acres between 2000 and 2005, equivalent to 200 square km per day, according to U.N. data.  The act of deforestation accounts for 20 percent of man-made carbon emissions.

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