Simple Optimization of Wood Production and Carbon Sinks

To clarify several unclear issues in the existing forestry and carbon literature, we apply an analytically solvable stand-level model for optimizing the values of wood production and carbon sinks. Nonmonotonic stand volume development is shown to lead to locally optimal finite and infinite rotations. Infinite rotation is related to an extensive margin of forestry that is shown to depend on discount rate and, in specific situations, on initial stand age. A rotation maximizing the pure value of carbon sinks is proved to lengthen with discount rate. In contrast to existing understanding, zero discounting is shown to not render carbon sink enhancement as superfluous; instead, maximizing the average carbon stock in standing forests and decaying wood products is optimal. This combined with wood production implies that optimal rotation is, excluding accidental parameter values, discontinuous at a zero discount rate. This has far-reaching implications for comparing carbon sink studies. The supply of forest carbon sinks is clarified and specified at the stand and normal forest levels.