Economic Analysis of Cedar Plantation Management and Mega-Solar Replacement

Abstract

Technology related to solar power as a renewable energy resource has increased in recent years. However, in Japan, forestland has been converted into mega-solar power plants with more than 1 MW photovoltaic capacity and such conversions raise significant concerns as they degrade forest ecosystem services. In this study, the profit and power supplies generated by a mega-solar power plant and a cedar (Cryptomeria japonica) plantation were evaluated. The profit for the cedar plantation was estimated from saw log and wood chip production, and its power supply was estimated from wood chip production alone. These figures were based on an optimal forest management strategy that was generated using a dynamic programming model. In this numerical simulation, it was found that the power supply from the mega-solar power plant was 50–150 times more than that from the cedar plantation. Regarding profit, it was found that the simulated mega-solar power plant provided NPV (net present value) of 8.5–90.6 MM JPY (Japanese Yen)/1–3 ha (0.1–3.0 MM JPY/ha/year), while the forest management simulation generated an NPV of 29,863 JPY/ha/year (for one timber rotation) and SEV (soil expectation value) of 3.6 MM JPY/ha at most. To avoid the conversion of forests into mega-solar power plants, this difference provides a basis for the cost of maintaining forests for ecosystem services and potential economic incentives.