The overall objective of the project is to provide new insights into the nature and consequences of policies for a sustainable economy. The focus is on policies affecting the use of forests and wood with special attention to policy optimality and coherence. Thus we will: Investigate the optimal allocation of forest resources and the needed policy instruments to correct market failures. Policies are assessed with different scenarios on technical development and global production structures. Analyze the interaction of national policy settings within a global context. Provide new insights into the governance and implementation that affect policy coherence and its consequences.