Economic Performance of Genetically Improved Reforestation Material in Joint Production of Timber and Carbon Sequestration: A Case Study from Finland

Abstract

Genetically improved material has been proven to financially outperform unimproved material in timber production according to various studies. Genetic improvements in carbon sequestration are also promising, implying a possibility for further financial gains. Research Highlights: Including carbon pricing (i.e., timber production combined with carbon sequestration) with genetically improved material improves financial performance compared to pure timber production. Furthermore, the proportion of carbon benefit (%) of absolute bare land value fluctuates between 27% and 42%, indicating a substantial role of carbon sequestration to financial performance. Background and Objectives: Until now, economic analyses of the impact of tree improvement have mainly dealt with growth performance: volume yield or height growth. Yet planted forests can have a significant contribution to carbon sequestration, which will play a major role in carbon markets. This study focuses on comparing the financial performance between genetically improved and unimproved reforestation material when stand management is optimized according to timber production or to joint production (timber and carbon sequestration together). Another goal is to reveal possible differences in financial performance related to climatic conditions along the south–north gradient. Materials and Methods: The stand projections are based on simulations with and without genetic gains for joint production (timber + carbon) and merely timber production in eight locations in Finland. Stand-level optimization is applied for financial analyses. Results: Genetically improved reforestation material considerably enhanced financial performance when the joint production of timber and carbon was applied, regardless of the climatic region. Conclusions: If carbon pricing became a reality, there would be a distinctive shift in bare land values, which is further boosted by a genetic gain.