Economic losses in carbon forestry due to errors in inventory data

Abstract

Forestry can help to mitigate climate change by storing carbon in trees, forest soils, and wood products. Forest owners can be subsidized if forestry removes carbon from the atmosphere and taxed if forestry produces emissions. Errors in forest inventory data can lead to losses in net present value (NPV) if management prescriptions are selected based on erroneous data. This study assesses the effect of inventory errors on economic losses in forest management when the objective is to maximize the total NPV of timber production and carbon payments. Errors similar to those in airborne laser scanning based forest inventory were simulated in stand attributes with a vine copula approach and nearest neighbor method. Carbon payments were based on the total carbon balance of forestry (including trees, soil, and wood-based products) and calculations were carried out for 30 years using carbon prices of 0, 50, 75, 100, 125, and 150 €·t−1. The results revealed that increasing the carbon price and decreasing the level of errors led to decreased losses in NPV. The inclusion of carbon payments for the maximization of the NPV decreased the effect of errors on the losses, which suggests that the value of collecting more accurate forest inventory data may decrease when the carbon price increases.