Commercial Forests in Scotland - An Economic Appraisal of Replanting

The economic returns from replanting commercial forests are estimated using an investment model which links physical resource information with economic data, including appropriate monetised values for the major non-market benefits such as recreation and carbon storage. The area and location of sites in Scotland which are uneconomic, i. e. forests, which if replanted with commercial crops, would fail to achieve the current government target rate of return of 6%, are identified. Depending on the values and assumptions used, between 12% (105,000 ha) and 48% (532,500 ha) of existing forests were found to be uneconomic. Because data on the water resource costs of commercial forests are not available and the higher biodiversity value of natural regeneration could not be included in the opportunity cost of land, these percentages are likely to be lower-bound estimates. On the grounds of economic efficiency, abandonment to natural regeneration is the most appropriate land use for these sites, but this might be considered undesirable because of land management considerations. Modified grant payments for natural regeneration under the Woodland Grant Scheme to ensure delivery of enhanced non-market benefits through judicious management and silviculture are suggested. Cautious implementation of this new policy is, however, recommended while further research on the physical suitability of sites for natural regeneration is carried out. More work is also needed to value the non-use benefits of different forest types.