Article Meeting Challenges in Forestry: Improving Performance and Competitiveness Robert Lundmark 1, *, Tommy Lundgren 2 , Elias Olofsson 1 and Wenchao Zhou 2   Citation: Lundmark, R.; Lundgren, T.; Olofsson, E.; Zhou, W. Meeting Challenges in Forestry: Improving Performance and Competitiveness. Forests 2021, 12, 208. https:// doi.org/10.3390/f12020208 Academic Editor: Luis Diaz-Balteiro Received: 15 January 2021 Accepted: 3 February 2021 Published: 10 February 2021 Publisher’s Note: MDPI stays neutral with regard to jurisdictional claims in published maps and institutional affil- iations. Copyright: © 2021 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (https:// creativecommons.org/licenses/by/ 4.0/). 1 ETS/Economics, Luleå University of Technology, SE-971 87 Luleå, Sweden; elias.olofsson@ltu.se 2 Department of Forest Economics, Centre for Environmental and Resource Economics, Swedish University of Agricultural Sciences, SE-901 83 Umeå, Sweden; tommy.lundgren@slu.se (T.L.); zhou.wenchao@slu.se (W.Z.) * Correspondence: robert.lundmark@ltu.se; Tel.: +46-920-492-346 Abstract: Improving the efficiency of the forestry sector will have an important impact on our possibility to attain long-term sustainability and mitigate climate change. In this study, attainable, and sustainable, efficiency improvements in the harvesting of forest products are analyzed using Data Envelopment Analysis (DEA). The price impacts of the efficient harvesting volumes are evaluated in a second step using a spatial forest sector model. The results indicate that the harvested volumes of forest products, both for the industry and energy sectors, can be significantly increased if a more efficient forest management is adopted. This supply-side effect will also result in general price decreases for sawlogs, pulpwood, fuelwood and harvesting residues. However, in certain counties, and for specific forest products, the estimated decreasing price effect from a more efficient forest management cannot fully offset the increasing price effect of the energy sector expanding its use of forest products. More forest biomass enters the market, which is needed in the transition towards a bioeconomy, and the increased availability of forest biomass will restrict the price effect making investments in the bioeconomy more likely to be profitable. Keywords: data envelopment analysis; forest sector; economic modelling; partial equilibrium; network; integrated assessment 1. Introduction The forest sector is usually an economically important sector in forest endowed coun- tries [1]. As such, it is important to evaluate the performance of the sector to ensure a high efficiency and competitiveness as well as to provide knowledge for continuous improvements. In addition, climate change mitigation, provision of ecosystem services, recreation and renewable energy as well as suppling feedstocks to a growing bioeconomy are but a few of the challenges facing the forest sector today, while surrounded by stringent sustainability issues. The success of the forest sector to meet these challenges depends on improving its performance and competitiveness, as well as on developing new prod- ucts, developing new or improved technologies and on the ability to adapt to changing market conditions (e.g., [2]). The purpose of this study is to evaluate price impacts of attainable, and sustainable, efficiency improvements in the harvesting of forest products. To achieve this purpose, an integrated approach of two forest models is proposed. The first model explicitly addresses the efficiency issues in the forestry sector using a Data Envelopment Analysis (DEA) approach. The second model exploits the obtained results in a partial equilibrium forest sector model to estimate price effects with the improved performances. This paper is the first one analyzing effects from an improved performance in the forestry sector by integrating these two methodologies. There are several methods available to evaluate the performance and competitiveness of the forest sector. Performance is commonly measured as efficiency using different DEA techniques. This approach, applied to forestry, has received some attention in the scientific Forests 2021, 12, 208. https://doi.org/10.3390/f12020208 https://www.mdpi.com/journal/forests