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Increasing natural disturbances in conifer forests worldwide complicate political decisions about appropriate land management. In particular, allowing insects to kill trees without intervention has intensified public debate over the dual roles of strictly protected areas to sustain ecosystem services and to conserve biodiversity. Here we show that after large scale bark beetle Ips typographus infestation in spruce Picea abies forests in southeastern Germany, maximum nitrate concentrations in runoff used for drinking water increased significantly but only temporarily at the headwater scale. Moreover, this major criterion of water quality remained consistently far below the limit recommended by the World Health Organization. At the same time, biodiversity, including numbers of Red‐listed species, increased for most taxa across a broad range of lineages. Our study provides strong support for a policy to allow natural disturbance‐recovery processes to operate unimpeded in conifer‐dominated mountain forests, especially within protected areas.