Looking beyond timber: Empirical evidence for the diversification of forest enterprises and the profitability of auxiliary activities in Austria

Although a recent rise in timber prices seems to counter the long-term trend of declining profitability of timber production, the development of additional sources of income still constitutes a strategic challenge for forest enterprises. Furthermore, increasing interest of stakeholders in various forestry goods and services requires dealing comprehensively with the potentials of multifunctional forestry. In fact, forest enterprises may be engaged not only in providing a range of forestry-based outputs but also with ventures unrelated to forests. Nevertheless, there is still little empirical evidence concerning the economic significance of diversification. Established economic monitoring schemes traditionally concentrate on timber production. Political interest and forest certification are typically restricted to forest-based activities. In this paper, the empirical evidence regarding auxiliary activities as documented by the Austrian accountancy network of larger forest enterprises is appraised for the first time. A set of economic key figures can be derived for a considerable range of activities. On average, timber production is still dominating by far, other activities contributing in total only to an equivalent of some 2.5% of the timber profits. A range of methodical limitations associated with the data collected so far underpin the necessity to interpret results prudently. Several amendments are identified which could substantially improve the significance of the empirical investigations.