Germany could become the first major economy to develop a climate policy that fully promotes ecosystem services, a reform that would provide a major incentive for the country’s 11.4 million hectares of forest and 90 billion trees.
That is according to new research produced by the Potsdam Institute for Climate Impact Research and the Georg-August University Göttingen, which predicts that regulators will introduce a payment system to compensate forest owners.
The study uses Predictioneer’s Game, a game theory-based model that has forecast the outcomes of political negotiations around payments: “This model predicted the future of Hong Kong after the 1997 handover from the UK to the People’s Republic of China, the 2015 Paris Agreement on Climate Change, and the climate-related water policy of India.”
Forests’ growing importance in climate policy stems from their critical role in capturing and storing CO2. Already, the United States is among a growing number of global governments looking to ‘account for ecosystem services’ when making major policy decisions.
According to James Goodwin, a senior policy analyst for the US Center for Progressive Reform, the push to make ecosystem accounting central to more than US $10 trillion of governmental decision-making could be a game changer for nature-positive assets.
“Imagine the Department of the Interior is considering a rule that would make harvesting timber from public lands easier,” he told the Hill, “historically, the analysis would have accounted for the economic benefits of the harvested timber and not the environmental credentials.”
Wood Central understands that the European Union’s Green Deal aims to achieve net-zero greenhouse gas emissions by 2050, with forests playing a pivotal role in carbon removal. As a result, “these policies have increased pressure on national governments to incentivise forest management practices that enhance sequestration and biodiversity.”
According to forecasts, German forest carbon sinks will receive partial remuneration, nature conservation efforts will be supported, and climate-resilient forest management will also be financially supported. The initial guidelines, formulated in a narrow political window, “have already provided forest owners with windfall profits, suggesting a favourable environment for the continued development of such policies,” they said.
The model also predicts that remuneration for nature conservation will include multiple criteria, covering aspects like biodiversity, soil health, and the preservation of native species: “For climate resilience, payments will likely focus on measures such as promoting mixed-species forests and protecting genetic diversity.”
In addition, the research suggests that while the initial payments may be modest, there is significant potential for expansion as Germany continues to align its forest policy with broader climate objectives. Once implemented, the remuneration system could provide substantial financial support to forest owners in exchange for adopting practices that enhance Germany’s forests’ ecological and climate resilience.
- To learn more about ecosystem services and the role of forest certification in achieving the full value of forest-based ecosystem services, visit Wood Central’s special feature.
