An integrated spatial assessment of the investment potential of three species in southern Ontario, Canada inclusive of carbon benefits

This study explores the economic feasibility of several long-rotation afforestation scenarios for southern Ontario, Canada. Three species, red pine (Pinus resinosa Ait.), Norway spruce (Picea abies L.) and black walnut (Juglans nigra L.) are examined. We integrate growth and yield models, site suitability maps, and several management scenarios to investigate the investment attractiveness of these species inclusive and exclusive of carbon sequestration values. We report net present values (NPV), internal rates of return (IRR) and two break-even price metrics. For wood value only scenarios the IRRs range from 4.3 to 4.6% for red pine and 3.4–3.6% for Norway spruce (for the most attractive 10,000 ha, in a single rotation scenario). Black walnut had rates of return 3.5–3.7% for the most attractive 10,000 ha area. Adding carbon valued at Cdn $3.4 per metric ton CO2 − e (roughly 2005 prices in the Chicago Climate Exchange) increases rates of return by about 0.6% for red pine and Norway spruce and 0.4% for black walnut scenarios. Perhaps surprisingly these returns are comparable and better than 20-year rotation hybrid poplar plantations. To achieve a 6% real rate of return break-even carbon prices were $10.7/t CO2 − e for red pine, $12.6/t CO2 − e for Norway spruce and $17.2/t CO2 − e for black walnut (again for the “best” 10,000 ha). Although somewhat unremarkable, the results suggest that these longer-rotation species may be a better investment than perhaps previously expected if landowners have the appropriate site conditions.