Novel public policies, business models and mechanisms for the sustainable supply of and payment for forest ecosystem services

Proposals should aim to develop novel public policies, business models and mechanisms to ""internalise"" the proven socio-economic value of forest ecosystem services (""externalities"") and contribute to their sustainable supply, with proper consideration given to the multifunctional role of EU forests. Proposals should consider the holistic basket of economic, socio-cultural, recreational and environmental services, from both the supply and demand side, and the trade-offs between them. They should aim to close the gap between academic work, associated policy recommendations, and practice on the ground, and help achieve public acceptability. The role of active forest management, which incurs reduced income and/or higher investment, needs to be emphasised. Specifically, there is a need to develop mechanisms for the payment of ecosystem services at the appropriate level of forest management and administration. The pilot testing of the proposed mechanisms, which may combine public policy tools with business models, is encouraged. Proposals should include contributions from the social sciences and humanities, fall under the concept of the ""multi-actor approach""[[See definition of the 'multi-actor approach' in the introduction to this Work Programme part.]] and seek public engagement with regard to the groups of stakeholders included in the consortia and the proposed business models/mechanisms.

The Commission considers that proposals requesting a contribution from the EU of up to EUR 4 million would allow this specific challenge to be addressed appropriately. Nonetheless, this does not preclude the submission or selection of proposals requesting other amounts.

Regional differences with respect to the forest management systems implemented and long production cycles characterise the forestry sector in the EU. Forests generally provide for a range of goods and services, some valued by existing markets (i.e. wood and non-wood products), others not. Of the latter, some are ""public goods"" (i.e. they are non-excludable (everyone benefits from them) and are not subject to consumption rivalry), such as carbon sequestration and landscape, while others are ""common-pool resources"" (i.e. they are non-excludable goods but subject to competition in use), such as recreation or water supply. The regulatory framework is divided into forest polices and forest-related policies (e.g. rural development, climate, biodiversity, and energy) which are not necessarily mutually reinforcing. The responsibility for forest policies ranges from EU level (monitoring, protection, land use, land use change and forestry (LULUCF) reporting, etc.) to Member State or federal state level (inventory, planning, management, etc.). If the policy or market fails – a recognised threat – the undesired outcome is suboptimal provision of ecosystem services. The sustainable provision of ecosystem services therefore requires policy coordination, and the use of novel policies, business models and mechanisms, while taking into account the production of wood and non-wood forest products. Several EU Member States, with the help of the European Commission, are currently mapping and assessing the state of forest (and other) ecosystems and their services in their respective national territories as part of the 'Mapping and Assessment of Ecosystems and their Services (MAES) exercise. There is now significant scope to capitalise on these efforts and for greater implementation of the knowledge they have generated in practice.

Proposals should show how some, or all, of the following impacts will be achieved:

• Enhanced coordination in policy making together with the development of novel policies and business processes, translated into increased incentives for forest owners/administrators to sustainably supply essential ecosystem services, such as carbon sequestration, biodiversity conservation, water regulation, soil and nutrient regulation, landscape and recreation, while maintaining production of wood and non-wood forest products.