This paper discusses the integration of material flux analysis and agent analysis as the basis for a transition towards improved regional wood management in Appenzell Ausserrhoden (AR), a small Swiss canton located in the Pre-Alps of Switzerland. We present a wood flow analysis for forests, wood processing industries and consumption in AR, accounting for different wood products. We find that the forest is currently significantly underutilized although there are sizeable imports of wood and fuel to this small region. The underutilization of the forest contributes to a skewed age distribution, jeopardizing long-term sustainable development of the forest, as the fulfillment of its protective and production function are likely to be at risk. The wood resources, however, are capable of satisfying current wood demand among the population of AR and wood could even be exported. Underutilization has two main causes: first, wood prices are so low that harvesting trees is a money-losing proposition; second, consumer wood demand and the current supply from forest owners are not aligned. Furthermore, cultural values, lifestyle trends and traditions make an alignment of supply and demand difficult. Consensus and strategy building with the relevant stakeholders on the basis of the results obtained from the wood flow analysis and agent analysis is a reasonable next step to take. We conclude that wood flow analysis combined with agent analysis provide a useful and straightforward tool to be used as the basis of a transition process towards improved regional wood flows, which in turn should contribute to sustainable forest management.