How does carbon pricing impact optimal thinning schedules and net present value in Mediterranean pine plantations?

Abstract

Carbon pricing can play an essential role in promoting adaptive silviculture (including thinning) in Mediterranean pine forests. Commercial thinning can improve carbon sequestration and stocks, thereby contributing to climate change. In this paper, we present a mixed-integer programming model that optimizes the thinning schedule of stands and maximizes Net Present Value (NPV) over a 10-year planning period. In addition to harvesting and transport costs, the model included revenue from two sources: sawlogs and biomass extracted during the thinning, and credits from carbon stocks at the end of the planning period. The study area comprised 631 pine stands located in Andalusia, southern Spain, totaling a forest area of nearly 30,000 ha. Airborne Lidar data and allometric biomass models were used to estimate above ground forest biomass, including commercial timber, and carbon stocks. The analysis focused on the impact of carbon prices on NPV, optimal thinning schedules, flows of sawlogs and biomass products to customers, and carbon stocks at the end of the planning period. Increased NPV values ranging between €4.8 M and €24.9 M were obtained in scenarios that included a price for carbon stocks in addition to revenue from sawlogs and biomass. Carbon prices also impacted the flow of sawlogs and biomass delivered to end customers. On average, in scenarios with carbon prices, the flow of sawlogs increased from about 29,700 tonnes in year 1 to about 38,200 tonnes in year 10. These results reveal that thinning schedules and NPV are very sensitive to carbon prices and that the best economic returns are obtained when carbon stocks are added to sawlogs and biomass as a source of revenue.