Financial Analysis of Potential Carbon Value over 14 Years of Forest Restoration by the Framework Species Method

Abstract

The carbon storage value of forest restoration, by the framework species method (FSM) in northern Thailand, was assessed for trees (using a partial harvesting technique) and soil and compared with restoration costs. Forest carbon accumulation amounted to 143.08 tC/ha in trees and 8.56 tC/ha in soil over 14 years, with a combined value of USD 27,173.63 (net present value (NPV), discounted at 2.85%/year)) (at the current European carbon credit (EUA) price of 55.98 EUR/tCO2 = 242.21 USD/tC). Restoration costs increased from 2190.27 to 5680.72 USD/ha with declining pre-existing natural regeneration or 3.99–10.34 USD per ton of sequestered CO2 . Profits over 14 years ranged in NPV from 22,215.45 to 25,157.04 USD/ha, breaking even from just over 4 years to just under 7, respectively. In contrast, profits from maize cultivation (a major regional deforestation driver) averaged 96.25 USD/ha/year, or just 1347.53 USD/ha over 14 years. Consequently, forest restoration could become a financially attractive alternative land use, provided an open, transparent, carbon market is created. Therefore, this study supports creation of a forest-carbon trading system in Thailand, to incentivize forest restoration and fire prevention, increase farmers’ incomes, reduce smoke-related public health problems, protect watersheds, and conserve biodiversity.