Prospective impacts of windstorm risk on carbon sinks and the forestry sector: an integrated assessment with Monte Carlo simulations

Abstract

Abstract Storms pose a significant threat to economic activities in the forest sector and introduce non-permanence risks for carbon stocks. Following escalating climate ambitions, understanding and addressing these risks becomes imperative. Uncertainties intrinsic to the storm phenomenon render this task complex. This study uses an integrated forest sector model to assess the economic and carbon impacts of storm regimes, emphasizing the importance of uncertainties through Monte Carlo simulation. From an economic perspective, we unravel complex interplays between the salvage and inventory effects of storms that lead to heterogeneous transfers of economic welfare across agents and space. Non-affected forest owners benefit from inflated prices, while affected owners’ recovery hinges on the magnitude of storm damage. From a climate perspective, storms significantly impact the forest sector’s carbon sink, with a high risk of falling short on mitigation objectives. In 25% of simulations, we observe a substantial 24% decrease in carbon sequestration. Our findings advocate for (1) conservative reliance on natural carbon sinks in national climate mitigation strategies toward net-zero, and (2) tailored risk-sharing insurance mechanisms for forest owners, providing a buffer against economic uncertainties arising from climatic disruptions.