Growing Southern Appalachian forests for both timber and carbon storage value: Is there a trade-off?

The emerging voluntary forest carbon storage market poses implications for landowners and stakeholders interested in utilizing land for both timber harvest revenue and carbon storage payments. Forest carbon credit agreements are often (deferred or limited harvest) scenarios where payment for carbon storage is accrued in the forest over an interval and harvest restrictions are removed after the interval. Over this interval however, the change in value of timber is a concern; the volatility and complex biological relationships of the forest ecosystem as well as economic uncertainty provide the possibility that the timber included in the deferred harvest might devalue over time. If the potential devaluing of timber post-harvest is not recuperated by carbon payments over the interval, then the land could be considered more valuable as timber with the option to harvest. The inverse could be true as well, where post interval timber value and accrued carbon storage value are more valuable than the timber alone.

This project showed how data from the Forest Inventory and Analysis databases and the United States Forest Service's 'Forest Vegetation Simulator' software could be combined to model dynamic timber and carbon values for common Forest Types and Age Classes in the Southern Appalachian region.

The results presented in this project showed a potential trade off in timber and carbon storage values, with sensitivities to price per ton CO₂ and discount rate. The simulated forest plots decreased in total value over the interval unless Net Present Value was undiscounted. Against inflation or stock market return, the forest plots lost value over time on average. The price per ton CO₂ showed a sensitivity where the monetary values above current market rates assigned to carbon created tradeoff periods where the forest plots gained and sometimes ended with increased value. Additionally, changes in forest species composition and wood products profile were observed. These changes were consistent with the known trends of mesophication, showing that the simulated carbon agreements were contributing to this mode of forest degradation. The implications of this project and recommendations for continued research are discussed.