Seeing the Wood and the Trees

Paul McMahon, Managing Partner of SLM Partners, explains why continuous cover forestry is superior to rotational forestry for carbon storage, biodiversity and profitability.

Europe needs its forests to remove more carbon from the atmosphere if it is to meet climate change goals by 2050 and beyond. But the trend is going in the wrong direction – European forests are storing less carbon than ever before. At the same time, society wants its forests to deliver richer biodiversity, cleaner water, more recreational opportunities, beautiful landscapes – while still generating a profit.

Foresters are feeling the strain as they are pulled in different directions. Is there a way of balancing these competing demands?

The forest carbon conundrum

Europe possesses a vast forest resource base. The EU and UK have a combined 183 million hectares of forest and wooded land, covering more than 40% of the region. Forests are natural carbon sinks, as they draw carbon dioxide from the air through photosynthesis and store it in wood, leaves, roots and the soil.

In 2022, forests in the EU and UK removed the equivalent of 308 million tonnes of CO2[1]. However, the amount of carbon removed by forests has declined rapidly. In the EU, the annual rate of forest carbon removal has decreased by around one-third since 2013. The situation is even more extreme in countries such as Ireland, where the forest sector will shift from being a carbon sink to a net emitter by 2035. Irish forestry is facing a ’carbon cliff’.

The problem is partly due to declining rates of afforestation – we are simply not planting enough trees. But it is also caused by the way we manage forests. The forestry sector in Europe is dominated by even-aged forests with a limited number of tree species that are grown to a certain age, clear-felled and then replanted in a rotational system. When forests are clear-felled, large amounts of carbon are released from trees and soils, and artificially replanted forests take decades to grow back.

These monocultural forests are more vulnerable to pests, diseases and extreme weather. For example, between 2018 and 2020 Germany lost half a million hectares of trees (2% of its total forest area) to a spruce bark beetle caused by drought. In addition, rotational forestry is low in biodiversity and amenity value, and unpopular with local people.

In response, there has been a growing shift toward establishing native woodland or rewilding, allowing nature to reclaim former agricultural land. While excellent for biodiversity, these slow-growing forests store less carbon than fast-growing conifers or mixed commercial forests and yield little to no harvestable timber.

This matters because wood is a low-carbon alternative to fossil-fuel based materials like concrete, steel, oil and plastics. According to UK Forestry Commission research, native woodland or rewilded areas sequester less than half the carbon per hectare over a century compared to faster-growing forest types[2].

Rethinking forest management

New research has highlighted a viable alternative to both rotational forestry and rewilding – continuous cover forestry (CCF)[3]. Also known as ‘close to nature’ or ‘regenerative’ forestry, CCF maintains permanent forest cover by avoiding clear-felling and selectively harvesting individual trees, whilst promoting natural regeneration. This approach creates a diverse mix of species and ages, gradually developing a more complex forest structure. The ultimate goal is to balance social, environmental and economic outcomes.

CCF offers strong environmental resilience, with studies showing it enhances forests’ ability to withstand storms, pests and diseases. Economically, it often outperforms traditional approaches. Research from the UK, Finland, Germany, Ireland, and Croatia shows that CCF generally yields higher financial returns than rotational forestry.

Additionally, forests managed using CCF have higher carbon stocks and avoid the loss of carbon that comes with clear-fell events. For example, modelling on SLM Partners’ Irish forestry portfolio found that adopting CCF could sequester 110 tonnes more CO2 per hectare than standard rotational forestry over a 20-year period.

In turn, this could generate 164,614 carbon credits under Verra’s improved forest management methodology, across the surveyed 1,763 hectares. At today’s European market price for voluntary forest carbon credits, this equates to €8 million (US$9.1 million).

Scaling up CCF

CCF is used on an estimated 22-30% of Europe’s production forests[4]. It is not a new concept, having first emerged in places such as Germany, Switzerland, Austria and Slovenia where foresters grappled with the poor performance of plantation forests and widespread wind damage in the early 20th century. It is spreading to other parts of Europe and is now supported by national forest policy in many countries, such as the EU’s Nature Restoration Law and the EU Forest Strategy for 2030.

Forest owners and investors can play a role in scaling up forest management that delivers on timber production, carbon and biodiversity. But planting forests is not enough; how forests are managed matters. While rotational forestry may suit the timber industry short-term, Continuous Cover Forestry offers stronger long-term returns and greater resilience through diverse, multi-functional forests.

[1] EU EEA & UK JNCC

[2] Forest Research, Quantifying the sustainable forestry carbon cycle (June 2022)

[3] SLM Partners, Investing in Continuous Cover Forestry in Europe, White Paper (Feb 2025)

[4] Mason et al., ‘Continuous cover forestry in Europe: usage and the knowledge gaps and challenges to wider adoption’, Forestry: An International Journal of Forest Research, Volume 95, Issue 1, January 2022

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