Forest management with carbon scenarios in the central region of Mexico

Abstract

The search for mechanisms to mitigate global warming has generated a series of proposals to reduce deforestation and promote conservation of forests as carbon stocks through financial or in-kind support. However, the economic implications of including carbon sequestration in forest for timber production have not been dealt with in depth, and the conditions in which combined production might be a profitable option to forest owners, particularly in Mexico, are unknown. The aim of this study was to quantify carbon sequestration in a central region of Mexico and evaluate the profitability of selling carbon credits as well as timber products. Data and information used comes from three inventories (2013, 2014 and 2016) taken in 160 permanent sampling plots of 400 m2 each; forest management costs per hectare were obtained through interviews to the landowners, and the profitability was assessed using the economic indicators Net Present Value (NPV), Internal Return Rate (IRR), Benefit-Cost Ratio (BCR), and Land Expected Value (LEV). The results indicate that, in areas of low productivity, carbon sequestration is profitable only at a low discount rate (3.5%) and a high price of the ton CO2e (USD 100 ha-1 year-1). However, under combined production, the optimal rotation periods are longer, depending on the discount rate and price of sequestered carbon. Therefore, timber production will continue to be the main economic activity, until the rules of operation of the different mechanisms created for carbon sequestration become more flexible and the carbon markets offer more attractive incentives.

Keywords

• Climate Change
• Carbon Sequestration
• Productivity
• Financial Profitability
• Optimal Rotation