Changing temperature and precipitation pattern and increasing concentrations of atmospheric CO 2 are likely to drive significant modifications in natural and modified forests. Our review is focused on recent publications that discuss the changes in commercial forestry, excluding the ecosystem functions of forests and nontimber forest products. We concentrate on potential direct and indirect impacts of climate change on forest industry, the projections of future trends in commercial forestry, the possible role of biofuels, and changes in supply and demand.CO2 ͉ economics ͉ industrial forestry ͉ biofuels G lobally, forests cover Ϸ4 billion hectares (ha) of land, or 30% of the Earth's land surface (1). In 2005, 3.5 billion m 3 of wood of 434 billion m 3 of growing stock were removed from the forests (Fig. 1); Ϸ60% of this amount was industrial roundwood and the rest was fuel wood (1). The majority of the forest land is covered with primary (36%) or modified (53%) natural forests. The primary forest area has been slowly decreasing by Ϸ6 million ha annually since the 1990s, and this rate is especially high in Brazil and Indonesia; these two countries are responsible for the loss of 4.9 million ha of forests annually. Forest loss tends to occur in low-income countries, largely in the tropics, whereas higher-income countries have reversed their earlier forest losses and are already experiencing forest expansion (2).Only 3% of the forest land is covered with productive forest plantations; however, this area had been growing rapidly by 2 million ha annually in the 1990s and by 2.8 million ha through this decade. Plantations are being established largely in the tropics and subtropics, e.g., Brazil and Indonesia, but also in highproductivity temperate regions, e.g., Chile and China. Despite their relatively small area, forest plantations provide more than a third of industrial roundwood, and the shift of production from natural forests to the plantations is projected to accelerate to Ͼ40% in the 2030s (3, 4) and 75% in the 2050s (5).Approximately half of the total wood harvest is reported by the countries to the Food and Agriculture Organization (FAO) as fuels. This estimate must, however, be increased up to as much as 60-65% (making fuel the single most important product of the sector), as Ϸ15% of the industrial roundwood is eventually used for energy by the forest industry (6). The role of wood for fuel is especially high in developing countries, which use it as a source of 15% of their primary energy consumption and effectively produce Ͼ90% of global wood fuels. Whereas in developing countries the wood fuels are typically consumed in a form of wood or charcoal, in the developed countries more than half of wood fuels are recovered from the burning of black liquor, which is a byproduct of the papermaking industry (6).Aside from timber and fuel production, the wide range of services supplied by the forests includes nontimber forest products, such as berries and mushrooms, providing wildlife habitats, soil and water protect...