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The aim of this study was to develop a method for segment-based forest inventory and determine whether segment-level inventories can be used in forest management planning. The study area covered 76 ha located in two different aerial photographs in eastern Finland. The study area was segmented into 220 segments with the aid of aerial photographs and the segment-level forest characteristics were assessed in the field using relascope sample plots and a field computer which displayed the aerial photographs, segment borders and surveyor's location on the screen. The segment estimates were calculated as weighted averages of k nearest neighbours ( k NN) for the segments and the sample plots. The estimates were tested with a cross-validation technique. The averages and the standard deviations of the spectral values of aerial images extracted for the segments and the sample plots were used in the k NN estimation. The relative root mean square error of the mean volume was 58.1% (bias –6.4%) at the segment level and 57.9% (bias –0.9%) at the sample plot level. The segment-based approach studied here needs further research and improvement before it can be applied to forest management planning.