The economic value of the effect of weather variability on forest ecosystem services in Sweden

University essay from SLU/Dept. of Economics

Abstract: In Sweden, production forests primarily consist of planted coniferous trees often mixed with naturally regenerated broadleaves. The predominating boreal conifer species are Norway spruce, and Scots pine which constitutes 40.8% and 39% of the total productive forests cover respectively. This thesis aims to estimate the effect of weather variability and management practices on forest productivity and to calculate the total economic value of forest ecosystem services of timber and carbon sequestration in Sweden. The analysis is carried out in two steps. Firstly, to estimate the impact of weather conditions and management treatments on forest growth using a theoretically sound linearized logistic growth model. Secondly, to quantify the total economic value of the timber and carbon sequestration based on their unit net prices using the static additive model approach. The findings suggest that forest productivity in the boreal region increases with the rise of temperature and the length of the vegetation period. Also, the management system of scarification contributes to the increase in standing volume per hectare. The long-term effect of scarification can last from the beginning of young planted seedlings until they reach high levels of productivity. Accordingly, the increase of weather variability of temperature and the length of the vegetation period on forest productivity contribute to the total economic benefit mainly through the incremental value of carbon sequestration. The total economic value in the base scenario is reported to be SEK 1065/m3/ha. In average, the total value increases by about 11% with a one-unit increase of temperature and around 1.5% with a one-unit increase of the length of the vegetation period relative to the base scenario. However, the value of timber remains constant and equals to SEK 923/m3/ha in all calculation scenarios. In 2018, the economic value of timber production in the entire country constituted 23% of the gross domestic product (GDP). Because of the nature of local weather conditions which vary across different regions in the country, this study could not easily estimate the overall total economic value of both timber and carbon sequestration at a national level. The results of this study provide incentives for future research to use mathematical relationships that could not only capture potential economic benefits but also would optimize management decisions which produce long-term impact on sustainable forest ecosystems.

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