TITLE:
Modelling Financially Optimal Afforestation and Forest Management Scenarios Using a Bio-Economic Model
AUTHORS:
Mary Ryan, Cathal O’Donoghue, Henry Phillips
KEYWORDS:
Forestry, Bio-Economic Modelling, Afforestation, Optimisation
JOURNAL NAME:
Open Journal of Forestry,
Vol.6 No.1,
January
11,
2016
ABSTRACT: The
expansion of non-industrial private forests (NIPF) in Ireland is unique in the
European context in which the almost doubling of forest cover within the last
thirty years has taken place largely on farmland. This is not surprising as
Ireland has some of the highest growth rates for conifers in Europe and also
has a large proportion of land which is marginal for agriculture but highly
productive under forests. However, in recent years, afforestation in Ireland as
in many European countries has fallen well short of policy targets. As the farm
afforestation decision essentially involves an inter-temporal land use change,
farmers need comprehensive information on forest market returns under different
environmental conditions and forest management regimes. This paper describes
the systematic development of a cohort forest bio-economic model which examines
financially optimal afforestation and management choices. Simulating a range of
productivity and harvesting scenarios for Sitka spruce, we find that different
objectives result in different outcomes. We see substantial differences between
the biologically optimal rotation, the reduced rotation in common usage and the
financially optimal rotation which maximises net present value and find that
the results are particularly sensitive to the choice of management and methodological
assumptions. Specifically, we find that better site productivity and thin
versus no-thin options result in shorter rotations across all optimisations,
reinforcing the usefulness of this type of financial modelling approach. This
information is critical for future policy design to further incentivise
afforestation of agricultural land.