Swedish Premium Pension Funds: Attributes and Performance

This study investigates the relationship between fund attributes and performance. The focus is on funds available in the Swedish Premium Pension system (PPM-funds). The aim has been to investigate whether administration fees, manager tenure or past performance are of importance for pension savers when they pick their PPM-funds. The results indicate that high fees are a disadvantage to pension savers investing in bond funds but not to those investing in stock funds. Manager tenure has no relationship with performance. There is evidence of performance persistency in most of the investigated fund categories.

Determinants of farmer retirement and farm succession in Finland

In the past decade, the Finnish agricultural sector has undergone rapid structural changes. The number of farms has decreased and the average farm size has increased when the number of farms transferred to new entrants has decreased. Part of the structural change in agriculture is manifested in early retirement programmes. In studying farmers exit behaviour in different countries, institutional differences, incentive programmes and constraints are found to matter. In Finland, farmers early retirement programmes were first introduced in 1974 and, during the last ten years, they have been carried out within the European Union framework for these programmes. The early retirement benefits are farmer specific and de-pend on the level of pension insurance the farmer has paid over his active farming years. In order to predict the future development of the agricultural sector, farmers have been frequently asked about their future plans and their plans for succession. However, the plans the farmers made for succession have been found to be time inconsistent. This study estimates the value of farmers stated succession plans in predicting revealed succession decisions. A stated succession plan exists when a farmer answers in a survey questionnaire that the farm is going to be transferred to a new entrant within a five-year period. The succession is revealed when the farm is transferred to a suc-cessor. Stated and revealed behaviour was estimated as a recursive Binomial Probit Model, which accounts for the censoring of the decision variables and controls for a potential correlation between the two equations. The results suggest that the succession plans, as stated by elderly farmers in the questionnaires, do not provide information that is significant and valuable in predicting true, com-pleted successions. Therefore, farmer exit should be analysed based on observed behaviour rather than on stated plans and intentions. As farm retirement plays a crucial role in determining the characteristics of structural change in agriculture, it is important to establish the factors which determine an exit from farming among eld-erly farmers and how off-farm income and income losses affect their exit choices. In this study, the observed choice of pension scheme by elderly farmers was analysed by a bivariate probit model. Despite some variations in significance and the effects of each factor, the ages of the farmer and spouse, the age and number of potential successors, farm size, income loss when retiring and the location of the farm together with the production line were found to be the most important determi-nants of early retirement and the transfer or closure of farms. Recently, the labour status of the spouse has been found to contribute significantly to individual retirement decisions. In this study, the effect of spousal retirement and economic incentives related to the timing of a farming couple s early retirement decision were analysed with a duration model. The results suggest that an expected pension in particular advances farm transfers. It was found that on farms operated by a couple, both early retirement and farm succession took place more often than on farms operated by a single person. However, the existence of a spouse delayed the timing of early retirement. Farming couples were found to co-ordinate their early retirement decisions when they both exit through agricultural retirement programmes, but such a co-ordination did not exist when one of the spouses retired under other pension schemes. Besides changes in the agricultural structure, the share and amount of off-farm income of a farm family s total income has also increased. In the study, the effect of off-farm income on farmers retirement decisions, in addition to other financial factors, was analysed. The unknown parameters were first estimated by a switching-type multivariate probit model and then by the simulated maxi-mum likelihood (SML) method, controlling for farmer specific fixed effects and serial correlation of the errors. The results suggest that elderly farmers off-farm income is a significant determinant in a farmer s choice to exit and close down the farm. However, off-farm income only has a short term effect on structural changes in agriculture since it does not significantly contribute to the timing of farm successions.

Is a Majority Enough? Psychological Well-being and Its Relation to Academic and Prosocial Motivation, Self-regulation and Achievement at school

This cross-sectional study analyzed psychological well-being at school using the Self-Determination theory as a theoretical frame-work. The study explored basic psychological needs fulfillment (BPNS), academic (SRQ-A), prosocial self-regulation (SRQ-P) and motivation, and their relationship with achievement in general, special and selective education (N=786, 444 boys, 345 girls, mean age 12 yrs 8 mths). Motivation starts behavior which becomes guided by self-regulation. The perceived locus of control (PLOC) affects how self-determined this behavior will be; in other words, to what extent it is autonomously regulated. In order learn and thus to be able to accept external goals, a student has to feel emotionally safe and have sufficient ego-flexibility—all of which builds on satisfied psychological needs. In this study those conditions were explored. In addition to traditional methods Self-organizing maps (SOM), was used in order to cluster the students according to their well-being, self-regulation, motivation and achievement scores. The main impacts of this research were: a presentation of the theory based alternative of studying psychological well-being at school and usage of both the variable and person-oriented approach. In this Finnish sample the results showed that the majority of students felt well, but the well-being varied by group. Overall about for 11–15% the basic needs were deprived depending on the educational group. Age and educational group were the most effective factors; gender was important in relation to prosocial identified behavior. Although the person-oriented SOM-approach, was in a large extent confirming what was no-ticed by using comparison of the variables: the SEN groups had lower levels of basic needs fulfillment and less autonomous self-regulation, interesting deviations of that rule appeared. Some of the SEL- and GEN-group members ended up in the more unfavorable SOM-clusters, and not all SEN-group members belonged to the poorest clusters (although not to the best either). This evidence refines the well-being and self-regulation picture, and may re-direct intervention plans, and turn our focus also on students who might otherwise remain unnoticed. On the other hand, these results imply simultaneously that in special education groups the average is not the whole truth. On the basis of theoretical and empirical considerations an intervention model was sug-gested. The aim of the model was to shift amotivation or external motivation in a more intrinsic direction. According to the theoretical and empirical evidence this can be achieved first by studying the self-concept a student has, and then trying to affect both inner and environmental factors—including a consideration of the basic psychological needs. Keywords: academic self-regulation, prosocial self-regulation, basic psychological needs, moti-vation, achievement

Early-onset depressive disorders,related mental health disorders and substance use-A prospective : longitudinal study of Finnish twins born 1983-1987

Early-onset psychiatric illnesses effects scatter to academic achievements as well as functioning in familial and social environments. From a public health point of view, depressive disorders are the most significant mental health disorders that begin in adolescence. Using prospective and longitudinal design, this study aimed to increase the understanding of early-onset depressive disorders, related mental health disorders and developing substance use in a large population-derived sample of adolescent Finnish twins. The participants of this study, FinnTwin12, an ongoing longitudinal population-based study, came from Finnish families with twins born in 1983-87 (exhaustive of five birth cohorts, identified from Finland s Central Population Register). With follow-up ongoing at age 20-24, this thesis assessed adolescent mental health in the first three waves, starting from baseline age 11-12 to follow-ups at age 14 and 17½. Some 5600 twins participated in questionnaire assessments of a wide range of health related behaviors. Mental health was further assessed among an intensively studied subsample of 1852 adolescents, who completed also professionally administered interviews at age 14, which provided data for full DSM-IV/III-R (Diagnostic and Statistical Manual for Mental Health disorders, 4th and 3rd editions) diagnoses. The participation rates of the study were 87-92%. The results of the study suggest, that the diagnostic criteria for major depressive disorder (MDD) may not capture youth with clinically significant early-onset depressive conditions outside clinical settings. Milder cases of depression, namely adolescents fulfilling the diagnostic criteria for minor depressive disorder, a qualitatively similar condition to MDD with fewer symptoms are also associated with marked suicidal thoughts, plans and attempts, recurrences and a high degree of comorbidity. Prospectively and longitudinally, early-onset depressive disorders were of substantial importance in the context of other mental health disorders and substance use behaviors: These data from a large population-derived sample established a substantial overlap between early-onset depressive disorders and attention deficit hyperactivity disorder in adolescent females, both of them significantly predictive for development of substance use among girls. Only in females baseline DSM-IV ADHD symptoms were strong predictors of alcohol abuse and dependence and illicit drug use at age 14 and frequent alcohol use and illicit drug use at age 17.½ when conduct disorder and previous substance use were controlled for. Early-onset depressive disorders were also prospectively and longitudinally associated to daily smoking behavior, smokeless tobacco use, frequent alcohol use and illicit drug use and eating disorders. Analysis of discordant twins suggested that these predictive associations were independent of familial confounds, such as family income, structure and parental models. In sum, early-onset depressive disorders predict subsequent involvement of substance use and psychiatric morbidity. A heightened risk for substance use is substantial also among those depressed below categorical diagnosis of MDD. Whether early recognition and interventions among these young people hold potential for substance use prevention further in their lives has potential public health significance and calls for more research. Data from this population-derived sample with balanced representation of boys and girls, suggested that boys and girls with ADHD behaviors may differ from each other in their vulnerability to substance use and depressive disorders: the data suggest more adverse substance use outcome for girls that was not attenuated by conduct disorder or previous substance use. Further, the prospective associations of early-onset depressive disorders and future elevated levels of addictive substance use is not explained by familial factors supporting future substance use, which could have important implications for substance use prevention.

Gender Divisions and Gender Policies in Top Finnish Corporations

The expansion of transnational corporations is a fundamental part of contemporary globalising processes. Through their activities, transnational corporations also have impacts on national and cultural gender relations, thus highlighting that gender relations are indeed amenable, to some extent, to social change. Accordingly, large transnational corporations have many effects and implications for gender relations in society, as well as having their own gender relations within them, characteristically in the form of men’s far greater presence in management than women’s. A key aspect in the functioning of transnational corporations is thus the way they organise and restructure gender relations within their own activities. The research presented here on gender divisions and gender policies in largest Finnish multinational and national corporations is part of a longer-term examination of the relations of gender relations in transnational corporations. It sets out the results of a survey of the largest 100 Finnish corporations with regard to the following main kinds of question: · general information on the corporation’s size, sector and economic activities; · the gender composition of their employment, middle management, top management, and board; · their gender equality plans and related policies. The human resources manager or their equivalent or delegate of 62 corporations responded to the survey. The general analysis of the data obtained from the survey is presented in this research report. Special attention is given to relations between the gender divisions and the gender policies of corporations. Interpretations of the data and more general theoretical implications are discussed in the report, with special attention to theoretical ways forward.

Non-industrial private forest landowners’ choices of timber management strategies and potential allowable cut.

In the study, the potential allowable cut in the district of Pohjois-Savo - based on the non-industrial private forest landowners' (NIPF) choices of timber management strategies - was clarified. Alternative timber management strategies were generated, and the choices and factors affecting the choices of timber management strategies by NIPF landowners were studied. The choices of timber management strategies were solved by maximizing the utility functions of the NIPF landowners. The parameters of the utility functions were estimated using the Analytic Hierarchy Process (AHP). The level of the potential allowable cut was compared to the cutting budgets based on the 7th and 8th National Forest Inventories (NFI7 and NFI8), to the combining of private forestry plans, and to the realized drain from non-industrial private forests. The potential allowable cut was calculated using the same MELA system as has been used in the calculation of the national cutting budget. The data consisted of the NIPF holdings (from the TASO planning system) that had been inventoried compartmentwise and had forestry plans made during the years 1984-1992. The NIPF landowners' choices of timber management strategies were clarified by a two-phase mail inquiry. The most preferred strategy obtained was "sustainability" (chosen by 62 % of landowners). The second in order of preference was "finance" (17 %) and the third was "saving" (11 %). "No cuttings", and "maximum cuttings" were the least preferred (9 % and 1 %, resp.). The factors promoting the choices of strategies with intensive cuttings were a) "farmer as forest owner" and "owning fields", b) "increase in the size of the forest holding", c) agriculture and forestry orientation in production, d) "decreasing short term stumpage earning expectations", e) "increasing intensity of future cuttings", and f) "choice of forest taxation system based on site productivity". The potential allowable cut defined in the study was 20 % higher than the average of the realized drain during the years 1988-1993, which in turn, was at the same level as the cutting budget based on the combining of forestry plans in eastern Finland. Respectively, the potential allowable cut defined in the study was 12 % lower than the NFI8-based greatest sustained allowable cut for the 1990s. Using the method presented in this study, timber management strategies can be clarified for non-industrial private forest landowners in different parts of Finland. Based on the choices of timber managemet strategies, regular cutting budgets can be calculated more realistically than before.

Leisure-time physical activity, health related functioning and retirement : a prospective cohort study among middle-aged employees

Physical inactivity has become a major threat to public health worldwide. The Finnish health and welfare policies emphasize that the working population should maintain good health and functioning until their normal retirement age and remain in good health and independence later in life. Health behaviours like physical activity potentially play an important role in reaching this target as physical activity contributes to better physical fitness and to reduced risk of major chronic diseases. The aim of this study was to examine first whether the volume and intensity of leisure-time physical activity impacts on subsequent physical health functioning, sickness absence and disability retirement. The second aim was to examine changes in leisure-time physical activity of moderate and vigorous intensity after transition to retirement. This study is part of the ongoing Helsinki Health Study. The baseline data were collected by questionnaires in 2000 - 02 among the employees of the City of Helsinki aged 40 to 60. The follow-up survey data were collected in 2007. Data on sickness absence were obtained from the employer s (City of Helsinki) sickness absence registers and pension data were obtained from the Finnish Centre for Pensions. Leisure-time physical activity was measured in four grades of intensity and classified according to physical activity recommendations considering both the volume and intensity of physical activity. Statistical techniques including analysis of covariance, logistic regression, Cox proportional hazards models and Poisson regression were used. Employees who were vigorously active during leisure time especially had better physical health functioning than those physically inactive. High physical activity in particular contributed to the maintenance of good physical health functioning. High physical activity also reduced the risk of subsequent sickness absences as well as the risk of all-cause disability retirement and retirement due to musculoskeletal and mental causes. Among those transferred to old-age retirement moderate-intensity leisure-time physical activity increased on average by more than half an hour per week and in addition the occurrence of physical inactivity reduced. Such changes were not observed among those remained employed and those transferred to disability retirement. This prospective cohort study provided novel results on the effects of leisure-time physical activity on health related functioning and changes in leisure-time physical activity after retirement. Although the benefits of moderate-intensity physical activity for health are well known these results suggest the importance of vigorous physical activity for subsequent health related functioning. Thus vigorous physical activity to enhance fitness should be given more emphasis from a public health perspective. In addition, physical activity should be encouraged among those who are about to retire.

Ajatuksista operaatioiksi : Suomen armeijan hyökkäysoperaatioiden suunnittelu jatkosodassa

In the research on the Continuation War, interest in the events themselves had exceeded the interest in military planning. Careful consideration has not been given to the planning process and the options that were available. This study shows how the planning of these operations was carried out and identifies the persons responsible. Contrary to earlier research this study shows that persons other than Field-Marshal Carl Gustaf Mannerheim and Quartermaster-General Aksel Airo took part in the planning. Furthermore, the plan was to carry out the operations further east than was ultimately done. The operation plans were coordinated by the Operations Department of Headquarters, which had the opportunity to influence on both Mannerheim and Airo. Part of the actual planning was made outside Headquarters, but final decisions were taken at Headquarters. It is worth observing that many times Mannerheim asked President Risto Ryti for his opinion concerning these operations. The Germans tried to influence the Finnish plans, but the Finns took their decisions independently, although they took German requests into account. It is well-known that the attack by the Finnish forces was stopped at the end of the year 1941. It is less well-known that the Finns planned new attacks until the autumn of 1942. At that point the Finns were convinced that the Germans would lose the war. The Finns were thus prepared to keep advancing should the Germans progress in the direction of Leningrad. This study shows that the Finnish military leaders worked for Finland s own plans and their cooperation with the Germans was directed to achieving this goal. In other words, Finland tried expand eastward with the help of the Germans. This purpose was particularly evident in the planning of the operations in the Hanko district and the Karelian Isthmus in the summer and autumn of 1941, in the Sorokka district in the spring of 1942 and around Lake Ladoga in the summer and autumn of 1942. The Finns reduced their activities when Germans took over responsibility for the operations. However, at the same time the Finns tried to support Germans in passive ways. The Finns justified the decrease in their activities with lack of Finnish forces and numerous defeats. Earlier research has shown that Finland was an active operator in the Continuation War and tried to take back the areas lost in the Winter War. In this study that view becomes more precise and clear especially with regard to Field-Marshal Mannerheim and other high military leaders. There is clear indication that the Finns would have attacked much further east had a German success made such an attack possible.

Petusta pitsaan : Ruokahuollon järjestelyt kriisiaikojen Suomessa

From bark bread to pizza - Food and exceptional circumstances: reactions of Finnish society to crises of food supply This study on the food supply under exceptional circumstances lies within the nutritional, historical and social sciences. The perspective and questions come under nutrition science, but are part of social decision-making. The study focuses on the first and second world wars as well as on contemporary society at the beginning of the 21st century. The main purpose of this study is to explore how Finnish society has responded to crises and what measures it has taken to sustain institutional food services and the food supply of households. The particular study interests include the school catering and food services in hospitals during the world wars. The situation in households is reflected in the counseling work carried out by state-run or civic organisations. Interest also focuses on the action of the scientific community. The decisions made in Finland are projected onto the solutions developed in some other European countries. The study is based primarily on the archive documents and annual reports prepared by food and health care authorities. Major source materials include scientific and professional publications. The evaluation of the situation in contemporary Finnish society is based on corresponding emergency plans and guidelines. The written material is supplemented by discussions with experts. Food rationing during the WWI and WWII differed in extent, details and unity. The food intake of some population groups was occasionally inadequate both in quantity, quality and safety. The counseling of the public focused on promoting self-sufficiency, improving cooking skills and widening food habits. One of the most vulnerable groups in regard to nutrition was long-term patients in institutions. As for future development, the world wars were never-theless important periods for public food services and counseling practices. WWII was also an important period for product development in the food industry. Significant work on food substitutes was carried out by Professor Carl Tigerstedt during WWI. The research of Professors A. I. Virtanen and Paavo Simola during WWII focused on vitamins. Crises threatening societies now differ from those faced a hundred years ago. Finland is bet-ter prepared, but in many ways more vulnerable to and dependent on other actors. Food rationing is a severe means of handling the scarcity of food, which is why contemporary society relies primarily on preparedness planning. Civic organisations played a key role during the world wars, and establishing an emergency food supply remains on their agenda. Although the objective of protecting the population remains the same for nutrition, food production, and food consumption, threat scenarios and the knowledge and skill levels of citizens are constantly changing. Continuous monitoring and evaluation is therefore needed.

Aika ennen aluepolitiikkaa. Pohjoisen kehityshankkeet ja alueiden kehittämisen idea 1950-luvun Suomessa

The dissertation focuses on the recognition of the problems of uneven regional development in Finland in the 1950s, and the way the idea of controlling this development was introduced to Finnish politics. Since it is often stated that Finnish regional policy only began in the mid-1960s, the period at hand is considered to fall in the time before regional policy. However, various ideas, plans and projects of regional development as well as different aims of development were brought forward and discussed already in the 1950s. These give an interesting perspective to the ideas of later regional development. In the 1950s, many Finnish politicians became more conscious of the unavoidable societal change. The need for overall modernisation of the society made it reasonable to expect a growing level of unemployment and eagerness to migration. The uneven distribution of well-being was also feared to cause discontent and political changes. International experience proved interfering in the regional development possible when using the argument of public interest ; the measures taken increased the level of well-being, helped sustain societal balance, and supported national economy. Many of the development projects of the 1950s focused on Northern Finland, the natural resources of which were considered an important reserve and the political climate of which was regarded unstable. After the late 1940s, regional development was discussed frequently both on the national and the regional level. Direct and indirect support was given to less developed areas and the government outlined thorough investigations in order to relieve the regional problem. Towards the end of the decade, the measures taken were already often connected to the idea of equality. In the 1950s the conflicts within and between the largest Finnish political parties significantly affected the decisions of regional development. There are three case studies in this qualitative research based on the narrative method. The case studies clarify the characteristics of the 1950s regional development. In the first one, the representatives of the northern region and the state first discuss the location of a state-run nitrogen fertilizer factory and later the location of a new university. In the second, the aims and perspectives of private entrepreneurs and the state collide due to ideas of statist industrialisation projects and later due to an idea of a tax relief targeting northern industry. In the third case, the main role is given to the changing rural areas, in relation to which societal development and urbanisation were often measured. The regional development of the 1950s laid groundwork for the new, more established regional policy. The early problem solving actions were aimed both at the prevailing situation and the future and thus showed the way for the upcoming actions. Regional development policy existed already before regional policy.

On the Importance of Mutual Fund Families in Emerging Markets

This study contributes to the mutual fund literature by looking at performance persistence on a fund family level, allowing for individual equity, bond and balanced funds to be included under single family umbrellas. The study is conducted on the emerging Finnish mutual fund market, an environment in which the importance of superior fund family teams is likely to be accentuated. Using both non–parametric and parametric tests we find robust evidence of performance persistence for the fund families. Persistence is particularly strong in the first half of the investigation period, which highlights the importance of fund families at early stages of market development.

What Determines Stock Option Contract Design?

This paper analyzes factors driving the design of stock option plans for Finnish firms. We examine determinants of the scope of plans, exercise price, target group, and dividend protection. The scope is found to be negatively related to Tobin’s Q and positively related to proxies for monitoring costs. The scope is also greater in broad-based plans, and in plans with dividend protection. Prior stock return is found to be negatively related to the size of the premium (out-of-the-moneyness), whereas dividend protection increases the premium. The results also suggest that investment intensity, cash flow, and monitoring costs are associated with the likelihood of granting premium (out-of-the-money) stock options. Furthermore, the likelihood of granting broad-based plans is increasing in institutional ownership and cash flow constraints, and decreasing in firm size. Broad-based plans are also more likely among firms in growth industries. We find support that the likelihood of dividend protection is decreasing in foreign ownership. In addition, firms paying zero-dividends are less likely to include dividend protection, whereas higher unsystematic risk is associated with a greater likelihood of including dividend protection.

Rauhan atomi, sodan koodi : Suomalaisen atomivoimaratkaisun teknopolitiikka 1955-1970

This dissertation investigates the atomic power solution in Finland between 1955 - 1970. During these years a national arrangement for atomic energy technology evolved. The foundations of the Finnish atomic energy policy; the creation of basic legislation and the first governmental bodies, were laid between 1955 - 1965. In the late 1960's, the necessary technological and political decisions were made in order to purchase the first commercial nuclear reactor. A historical narration of this process is seen in the international context of "atoms for peace" policies and Cold War history in general. The geopolitical position of Finland made it necessary to become involved in the balanced participation in international scientific-technical exchange and assistive nuclear programs. The Paris Peace Treaty of 1947 categorically denied Finland acquisition of nuclear weapons. Accordingly, from the "Geneva year" of 1955, the emphasis was placed on peaceful purposes for atomic energy as well as on the education of national professionals in Finland. An initiative for the governmental atomic energy commission came from academia but the ultimate motive behind it was an anticipated structural change in the supply of national energy. Economically exploitable hydro power resources were expected to be built within ten years and atomic power was seen as a promising and complementing new energy technology. While importing fuels like coal was out of the question, because of scarce foreign currency, domestic uranium mineral deposits were considered as a potential source of nuclear fuel. Nevertheless, even then nuclear energy was regarded as just one of the possible future energy options. In the mid-1960 s a bandwagon effect of light water reactor orders was witnessed in the United States and soon elsewhere in the world. In Finland, two separate invitations for bids for nuclear reactors were initiated. This study explores at length both their preceding grounds and later phases. An explanation is given that the parallel, independent and nearly identical tenders reflected a post-war ideological rivalry between the state-owned utility Imatran Voima and private energy utilities. A private sector nuclear power association Voimayhdistys Ydin represented energy intensive paper and pulp industries and wanted to have free choice instead of being associated themselves with "the state monopoly" in energy pricing. As a background to this, a decisive change had started to happen within Finnish energy policy: private and municipal big thermal power plants became incorporated into the national hydro power production system. A characteristic phenomenon in the later history is the Soviet Union s effort to bid for the tender of Imatran Voima. A nuclear superpower was willing to take part in competition but not on a turnkey basis as Imatran Voima had presumed. As a result of many political turns and four years of negotiations the first Finnish commercial light water reactor was ordered from the East. Soon after this the private nuclear power group ordered its reactors from Sweden. This work interprets this as a reasonable geopolitical balance in choosing politically sensitive technology. Conceptually, social and political dimensions of new technology are emphasised. Negotiations on the Finnish atomic energy program are viewed as a cooperation and a struggle, where state-oriented and private-oriented regimes pose their own macro level views and goals (technopolitical imaginaries) and defend and advance their plans and practical modes of action (schemata). Here, not only technologists but even political actors are seen to contribute to technopolitical realisations.

Community-based Ecotourism as a Sustainable Development Option in the Taita Hills, Kenya

This study aims at identifying the existing and potential resources, as well as recognizing the hinderances, for community-based ecotourism development in the Taita Hills in south-eastern Kenya. The indigenous mountain rain forests on the hills are rich in biodiversity, but severely degraded because of encroachment caused by the dynamics of increased population, socio-politics and economics. The research problems are based on the hypothesis that there is no tourism in the Taita Hills generating income for the local economy and high population density combined with poverty creates a need for alternative employment opportunities as well as for sustainable ways of forest resource management. The data for this study was gathered during two field trips in Kenya, in January-February 2004 and 2005, as a part of the Taita Project within the Department of Geography at the University of Helsinki. The qualitative methods used consist of RRA and PRA techniques, in-depth interviews, a structured questionnaire and literature analysis as well as attendance on excursions and a workshop with conservation experts and officials. Four case areas in the Taita Hills are studied. The study concludes that alternative livelihoods are needed among the Taita Hills´ rural population and community-based ecotourism is seen as a way of bringing financial benefits for households as well as reviving the fading cultural traditions and indigenous knowledge about forest use. The governmental policies, district level development plans and some NGOs support ecotourism development. The Forest Act 2005 forms base for local participation in forest management. The unique natural features, the welcoming Taita-culture and the location in the coastal tourism circle favour Taita Hills. However, this kind of development has its risks, such as too rapid change of sorest usage level and the exposure of communities to an ecotourism treadmill process. The costbenefit ration of marketing for hard ecotourists is generally low and the tourism infrastructure needs upgrading in the Taita Hills. More tight collaboration is important between the different level stakeholders working for conservation and development. Community-based ecotourism in Taita Hills, when carefully planned and managed, could be one opportunity for Kenya to diversify its tourism product supply and for forestadjacent communities to gain tangible benefits on a sustainable basis from forests.