New McKinsey report addresses which advanced technologies for forest management are most promising, and how forestry companies can start their digital transformation.
Conducted by Harsh Choudhry and Glen O’Kelly for McKinsey & Company, the report argues that while digital technology is revolutionising industries around the globe, forestry has lagged behind. However, this is finally starting to change, states the authors.
Choudry and O’Kelly report some forestry pioneers are starting to achieve productivity increases and returns on investment similar to other industries, and the size of these gains is comparable to the shift from animal-powered to mechanised processes.
Unfortunately, according to the authors, digital solutions in forestry management science currently confront a system that still operates largely on the basis of fundamentals developed by Hans Carl von Carlowitz more than 300 years ago.
However, inspired by advances in agriculture, some forestry operators have begun pioneering the use of advanced technologies to improve forest management results. Within the industry, this approach is widely called ‘precision forestry’.
The potential for value creation from improved forest management is significant. Besides the ecological benefits of increased productivity there is substantial economic and social value at stake.
Globally, about 300 million hectares of plantation forests supply nearly two billion cubic metres of industrial wood (for use such as construction, paper and packaging) and two billion cubic metres of fuelwood for household heating and cooking. The economic value of the industrial wood is in the order of USD$200-billion, while the fuelwood remains a critical source of energy for households in developing countries.
Precision forestry is enabled by a wide range of emerging technologies, such as drones or unmanned aerial vehicles (UAVs), laser scanning (lidar), and soil sensors.
More than the adoption of digital technologies
But precision forestry is not simply the adoption of digital technologies. For forest managers, it involves a paradigm shift from a highly manual and analog system with broad-brush management prescriptions, to a system with digital data capture and planning, granular management prescriptions and tight operational control.
The report details 15 precision forestry technologies or practices the authors believe show the greatest promise to transform operations and improve forest management results. These are grouped in the categories of: genetics and nurseries; forest management (silviculture); harvesting; wood delivery; and ‘across the full value chain’.
Choudry and O’Kelly found that many leading forestry companies globally are adopting precision forestry technologies and there has been a noticeable proliferation of technology suppliers seeking to develop this space.
While many precision forestry technologies remain in trial phases, some are already established and increasingly gaining traction. The availability of these technologies, even of those being trialled, signals a major shift in the industry.
The authors advise that the key to capturing the potential value will be a holistic digital transformation that brings together the disparate applications of new technologies.
“The advent of these new tools and capabilities offers potential beyond raising the efficiency of practices handed down from the 18th century. It heralds the start of a revolution in how we manage the health and the performance of the world’s forests,” concludes the report.
Read the full report online.