Economics of carbon storage in heterogeneous forests

Abstract

Forests play a vital role in mitigating climate change, as they sequester and store large quantities of carbon. This dissertation examines how carbon storage may be increased by changing forest management at the stand level. To extend the economics of forest carbon storage beyond single-species even-aged stands, this dissertation develops a bioeconomic model framework that incorporates the size and species structure of the stand, and the optimal choice between continuous cover forestry and forestry based on clearcuts. The studies apply empirically estimated growth models for boreal conifer and broadleaf tree species. The dissertation consists of a summary section and three articles. The first article presents an analytically solvable economic model for timber production and carbon storage with optimized management regime choice between continuous cover and rotation forestry. Continuous-time optimal control theory is utilized to solve the thinning path and the potentially infinite rotation age: if no optimal finite rotation age exists, thinnings are performed indefinitely while maintaining continuous forest cover. The second article extends this model by applying a size-structured growth model for Norway spruce (Picea abies (L.) Karst.), roadside pricing of sawlog and pulpwood, variable and fixed harvesting costs, and several carbon pools. The timing and intensity of thinnings, the rotation age, and the management regime are optimized numerically. In the third article, the optimization approach of the second article is extended to mixed-species size-structured stands. Species mixtures include the commercially valuable Norway spruce and birch (Betula pendula Roth and B. pubescens Ehrh.), and other broadleaves (e.g. Eurasian aspen, Populus tremula L., and maple, Acer sp.) that have no market value. Optimal rotation age is shown to either increase or decrease with carbon price depending on interest rate and the speed of carbon release from harvested wood products. Given empirically realistic assumptions, carbon pricing increases the rotation period and eventually causes a regime shift from rotation management to continuous cover management. Hence, carbon pricing heightens the importance of determining the management regime-continuous cover or rotation forestry-through optimization. Optimal thinnings are invariably targeted to the largest size classes of each tree species. Carbon pricing postpones thinnings and increases the average size of harvested and standing trees, hence increasing mean stand volume. Without carbon pricing, commercially nonvaluable other broadleaves are felled during each harvesting operation. When carbon storage is valued, some of the other broadleaves are retained standing until they are large, thus increasing tree species diversity and deadwood quantity. The results suggest that moderate carbon price levels increase timber yields, especially of sawlog that may be used for long-lived products. Increasing carbon storage through changes in forest management is shown to be relatively inexpensive, ...