Climate change mitigation strategies in the forest sector: biophysical impacts and economic implications in British Columbia, Canada

Forests are essential for global climate change mitigation, because they can contribute carbon sinks. Forests not affected by land-use change remove about 8.8 GtCO₂e/year from the atmosphere (Pan et al. 2011). The Intergovernmental Panel on Climate Change (IPCC) reported that the forest sector has a mitigation potential of 0.2–13.8 GtCO₂e/year in 2030 with a cost up to US$100/tCO₂e (Smith et al. 2014). At the global scale, among various mitigation strategies, the use of wood products and wood energy represents high mitigation potential, as well as afforestation and reforestation options (IPCC 2014). Many studies have examined the potential of the forest sector for climate change mitigation at both global and regional scales (Kurz and Apps 1995; Bourque et al. 2007; Nabuurs et al. 2007; Lippke et al. 2011). FAO (2016) highlighted that, globally, forest activities can provide economic mitigation potential ranging from 1.9 to 5.5 GtCO₂e/year in 2040 at costs less than US$20/tCO₂e. Two background studies for FAO (2016) indicated that wood products, especially panels, also play an important role in climate change mitigation because of substitution effects. Seidl et al. (2007) examined mitigation impacts of alternative silviculture strategies in a forest management unit in Austria. Lundmark et al. (2014) compared two forest management and wood use strategies to a “do-nothing” scenario from a systems perspective in Sweden. Werner et al. (2010) investigated various forest and wood strategies using an integral model-based approach in Switzerland. In Canada, Smyth et al. (2014) conducted the first comprehensive study examining the mitigation potential of Canada’s managed forest and harvested wood products (HWPs). However, there are few studies that provide quantitative analyses of the mitigation potential of the forest sector in response to a series of possible mitigation strategies at national or provincial scale with considerable spatial detail. In fact, a thorough assessment of the impacts of mitigation strategies is complex due to the interaction between the forest sector and energy and other industrial product sectors, and a systems perspective is required to consider the carbon flow within and among forest ecosystems, wood products, and displacement effects when substituting wood-based products and energy for emission-intensive products (e.g., concrete, steel, plastic, etc.) and fossil fuel energy (Nabuurs et al. 2007; Lemprière et al. 2013; Smyth et al. 2014; Kurz et al. 2016).

The economically feasible mitigation benefits are expected to be lower than the biophysical mitigation potential, because the implementation of mitigation strategies has technical and economic constraints (the society’s resources that can be devoted to climate change mitigation are limited). It is therefore necessary to analyze the cost of mitigation strategies (Boyland 2006; Nabuurs et al. 2007; Strengers et al. 2008; van Minnen et al. 2008; Lemprière et al. 2013). The economics of forest carbon mitigation strategies including costs have been examined in Canada for activities such as afforestation (McKenney et al. 2004; Yemshanov et al. 2005; Yemshanov et al. 2015), harvest reduction (Man et al. 2015), bioenergy (Stennes and McBeath 2006; Ralevic et al. 2010; Zhang et al. 2010), intensive forest management (Insley et al. 2002), and for multiple strategies (van Kooten et al. 1992; Krcmar and van Kooten 2005; Kennedy et al. 2007). Based on the results of Smyth et al. (2014), Lemprière et al. (2017) conducted the first in-depth national examination of the economics of mitigation strategies from a systems perspective. Although at a coarse spatial resolution, they found that some strategies are likely to provide substantial cost-effective mitigation over the medium and long term to meet Canada’s emission reduction targets, provided that mitigation actions are initiated soon.

In this study, we further refined the methodology of Smyth et al. (2014) and Lemprière et al. (2017) with a much finer spatial resolution and applied it to the forest sector in the Canadian province of British Columbia to demonstrate the biophysical and economic mitigation potentials in response to a range of regionally differentiated strategies and portfolios. Socio-economic impacts of mitigation strategies were incorporated in the economic analysis to capture implications on the British Columbia’s (BC’s) economy and social welfare. The primary objective of this study was to quantify and compare the biophysical, economic, and socio-economic impacts of various mitigation strategies for BC to a business-as-usual scenario. BC’s forests and forest sector are among the most significant in Canada, and its forests are managed to achieve a balance across multiple goals including habitat, sustainable harvesting, employment, and others (Hoberg et al. 2016): contributing to climate change mitigation could become another goal to include in the balance. This study does not consider these other goals.

Our results indicated that implementing two or more strategies simultaneously in a FMU would achieve more mitigation than having only one individual strategy. However, combined strategies may not necessarily be more cost-effective or have more socio-economic benefits. For example, the combination of the bioenergy strategy and the more LLP strategy increased the average domestic mitigation from 4.0 MtCO₂e in the bioenergy strategy alone to 5.2 MtCO₂e in the long term but resulted in increased mitigation cost and less GDP and government revenue (Table 11). Strategies may or may not affect each other when combined (i.e., they are additive or not). In particular, the higher utilization strategy and the bioenergy strategy were not additive because higher utilization in harvest caused fewer harvest residues left on site, which resulted in a smaller supply for local bioenergy. In contrast, the more LLP strategy and the bioenergy strategy were additive, as shifting the wood product mix for a given harvest volume did not affect the amount of harvest residues. Therefore, whether a combined strategy was preferred varied, depending on the interaction between mitigation actions and policy goals. Further, our results also suggested that a portfolio would be superior to any single strategy applied across all FMUs. For instance, if the goal is to maximize domestic mitigation in the long run, PORT2 (panel d, Fig. 6) achieved more domestic mitigation than any individual strategy during the same period (panel a, Fig. 6). Finally, similar to what was found by Smyth et al. (2014), there was a trade-off in portfolios between long-term mitigation and short-term mitigation—less mitigation would be achieved in the long term to 2050 if the best short-term portfolio for 2020 was applied. This is because most of the strategies’ mitigation contributions are nonlinear over time (Fig. 3), and different strategies would be selected in the portfolios depending on the time scale of mitigation goals.

The higher utilization strategy assumed that the same amount of wood was harvested in a smaller area with a higher utilization level and that the same product mix could be achieved, i.e., incremental harvest from a stand had the same quality as the regular harvest from the stand, although this may not be the case in practice as the incremental harvest could be of lower quality and produce less valuable wood products. However, changes in the shares among different harvest products (softwood, hardwood, salvage harvest, and harvest residues) were captured in our analysis. This strategy resulted in the highest cumulative mitigation, but most mitigation was achieved in later years (Fig. 3) because fewer residues were left to decay and more carbon was sequestrated in unharvested stands, relative to the baseline. This strategy had a very flat cost curve that was close to the horizontal axis because unchanged harvest levels and a small logging cost reduction caused a small increase in total net revenue. The unchanged harvest level also meant that no new jobs were created and that there was insignificant contribution to other socio-economic indicators.

The harvest less strategy in our analysis assumed a reduced harvest level and increased costs because more dispersed cut blocks were needed to keep the same harvest characteristics (e.g., diameters, tree species, etc.). The mitigation impact of this strategy was limited because reduced emissions and increased carbon density resulting from harvesting less were offset over time by a lower carbon uptake rate due to less post-harvest regeneration and negative displacement effects since more emission-intensive products (e.g., concrete and steel) were assumed to be used to meet society’s demands. Also, because of higher logging costs and lower log production, respectively, less net profit was generated and negative socio-economic impacts were found. Therefore, this strategy highlights trade-offs between carbon density and carbon uptake rate based on the society’s demand for biomass (Lemprière et al. 2013), even though it had higher forest sector mitigation potential in the short term (Fig. 5).

In the bioenergy scenario, how much mitigation could be achieved at what cost varied greatly across FMUs because different numbers and types of bioenergy facilities were selected to substitute different fossil fuels by the LP model based on local energy demands, harvest residue availability within each FMU, transportation distances (simplified), and production costs for both bioenergy and fossil fuel energy being displaced. In this study, we assumed that in most FMUs, nearly 80% of the electricity was hydro-electricity and about 35% of heat was produced from biomass, which had no displacement benefits from bioenergy. Most mitigation benefits came from substituting bioenergy for heat and power generated using natural gas and fuel oil/diesel, and the percentage of these fossil fuels in total energy consumption varied across FMUs. Consequently, only 36 FMUs showed positive mitigation in this strategy. Among those, considerable cumulative mitigation was estimated in some areas and significant variation in cost per tonne was also observed (panel a, Fig. 7). High mitigation from this strategy was mostly from FMUs with large populations due to higher energy demands, but the strategy also incurred relatively high costs because in populated areas, a large proportion of fossil fuel energy is from natural gas which is generally much cheaper than bioenergy. In some other FMUs, especially those in the northern interior of BC, some remote communities are not connected to the power grid and produce energy using diesel generators with higher costs, indicating that lower energy costs would be possible in those FMUs if they converted to bioenergy, if the transportation costs for harvest residues were competitive. However, we did not directly estimate these effects.

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Because there was no bioenergy from harvest residues assumed in the baseline and no socio-economic impacts were estimated for displaced energy facilities, harvest residue-based bioenergy production was a new industry in this mitigation scenario and thus substantial revenue was created, generating large socio-economic benefits.

The restricted harvest strategy resulted in two outcomes compared to baseline harvest. In about three quarters of FMUs, restricting harvest to stands less than 250 years old while not also lowering the harvest target forced the model to harvest larger areas within a FMU to achieve the baseline harvest level because volume per hectare harvested is greater in older stands. In the remaining quarter of FMUs, however, the model was unable to find a sufficient amount of stands eligible for harvest within the FMU and the harvest targets were not achieved. Over time, the total area of harvest declined, resulting in decreasing total revenue in the forest sector and negative socio-economic impacts. Given that there are few stands over 250 years in BC’s interior region, harvest levels could be maintained in most FMUs by shifting harvest to younger stands based on the model assumptions. Negative mitigation impacts were found in those FMUs even if only the forest sector mitigation was considered (no displacement effects), indicating that the additional carbon preserved in old stands would be offset by the increased carbon losses resulting from increased harvest of younger stands. Without considering socio-economic impacts and values for other ecosystem services, most mitigation benefits generated by this strategy would be limited to the central and north coast of BC (panels a and b, Fig. 8) where harvest levels were significantly lowered because old growth represents a greater proportion of the baseline harvest in those areas and there are insufficient younger stands to meet harvest targets. In fact, those areas covered most of the Great Bear Rainforest protection area where ecosystem-based management is implemented and logging is largely prohibited (BCMoFLNRO 2016).

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Note that the restricted harvest strategy was developed based on simplified assumptions and do not reflect actual harvest practices and policies currently employed in BC (e.g., a stand age of 250 years as a criterion for restricting harvesting of old-growth forest would be too high for the interior area, and an average utilization rate of 85% may overestimate utilization in coastal old-growth stands). Furthermore, BC’s government policy on removing any land from what is harvestable results in an a priori reduction in the allowed harvestable volume, so the harvest rate on younger stands would remain the same. Further research is needed to refine utilization levels for different logging practices (e.g., helicopter logging that can be used in BC coastal forests typically has lower utilization standards and higher costs) to review and, where necessary, update yield curves and estimates of carbon sequestration in old-growth stands and to refine assumptions about compensation costs and changes in harvest targets that may be associated with the implementation of an age-restricted harvest strategy. Thus, we caution that this analysis of a restricted harvest strategy should not be used for policy development in the province without further assessment.

The only strategy regarding wood use in this study, the more LLP strategy, had linear cumulative mitigation over time because a constant 4% shift was assumed in the annual production from pulp and paper products to panels. This strategy greatly increased the carbon storage in HWP by transferring carbon from pulp and paper products (2 years half-life) to panels (25 years half-life) (IPCC 2006). In addition, more panel products further enhanced the mitigation impact via displacement effects. Consequently, this strategy demonstrated the highest cumulative global mitigation until 2040 when it was surpassed by the higher utilization strategy. Because of the fixed shift in product commodities, this strategy had a flat cost curve (Fig. 7) with only three different costs per tonne values recognizing the different cost and price assumptions we used for the three forest regions in the province. The cost per tonne values was high, because the pulp and paper industry is relatively more capital intensive—pulp and paper mills usually have larger proportion of capital investments in equipment and facilities than sawmills. Therefore, an equal proportional change in the production would cause more revenue loss in pulp and paper industry than would be gained in the panel industry. This is also the reason why shifting total production to panels would cause small negative GDP and government revenue effects (Table 11).

Although the strategy mixes selected by FMU across portfolios varied, higher utilization plus more LLP and higher utilization plus bioenergy plus more LLP were chosen in most FMUs in portfolios considering displacement effects (Fig. 5), indicating that those two strategies are among the best examined here when considering mitigation efforts of BC’s forest sector from a systems perspective. For the forest sector alone (ignoring displacement effects), however, the bioenergy strategy was not selected in portfolios for either long-term or short-term mitigation goals, because burning harvest residues for bioenergy created limited mitigation benefits relative to other strategies (panel b, Fig. 8). When the goal was to minimize domestic mitigation cost regardless of GHG emissions reductions, completely different strategies were chosen for the portfolios.

A sensitivity analysis of discount rates was conducted for PORT2 to examine possible changes in cost per tonne values if higher monetary and carbon discount rates were applied. Considering 3 and 1% discount rates to be the most conservative assumptions, we re-estimated the cost curve for PORT2 based on a moderate assumption of 5 and 3 and also a high assumption of 8 and 6%, respectively (Fig. 9). The results suggested that the moderate assumption would increase the cost curve by up to 13% (from $106/tCO₂e to $119/tCO₂e) to achieve up to 12 MtCO₂e per year, and the ambitious assumption would shift the curve upwards by up to 25% (from $106/tCO₂e to $149/tCO₂e) to achieve the same annual mitigation.

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The biophysical mitigation potential in this study is by no means the upper limit of what can be achieved if society is ambitious in implementing changes to reduce GHG emissions. Other mitigation options involving forests have not been assessed here, such as reductions in deforestation rates, rehabilitation of stands affected by natural disturbances that have not successfully regenerated, afforestation including short-rotation bioenergy plantations (Amichev et al. 2012), and intensive forest management including nutrient management (Lemprière et al. 2013). Potential impacts of climate change on mitigation potentials were not considered here but need to be addressed in ongoing research. For the economic and socio-economic analyses, future work could consider dynamic price and cost assumptions.

In this study, we examined how much BC’s forest sector may contribute to climate change mitigation by developing several potential mitigation strategies and portfolios and examining their biophysical impacts, costs, and socio-economic impacts on BC’s economy. The results indicated that significant mitigation with positive socio-economic benefits would be possible if long-term regionally differentiated strategies were implemented soon. Our analysis estimated that regionally differentiated portfolios provided the highest cumulative global mitigation (PORT1) and the highest cumulative domestic mitigation (PORT2) by 2050 with similar strategy mixes that consisted of combinations of the higher utilization, bioenergy, restricted harvest, and more LLP strategies. By implementing PORT2 starting in 2017, BC’s forest sector could contribute 35% of the province’s emission reduction target in 2050 at a cost of less than $100/tCO₂e, although implementation of such a forest sector mitigation portfolio would also cost $610 million Canadian dollars every year on average between 2017 and 2050.

Consideration of mitigation strategies would need to balance the multiple objectives that exist for BC’s forests and forest sector. This study is the first regionally differentiated forest-related mitigation study for the entire province of BC, incorporating biophysical, economic, and socio-economic impacts using rigorous quantitative analyses from a systems perspective. Moreover, our findings indicate that mitigation benefits from strategy implementation in one country could be extended to other countries via international trade if exported wood products are used to displace emission-intensive materials.

Activities related to higher utilization and increased use of longer-lived wood products and bioenergy from waste wood have been recognized in this study and in several other countries (Werner et al. 2010; Lundmark et al. 2014; Nordström et al. 2016; FAO 2016) as effective options to mitigate climate change. Based on these analyses, we recommend further exploration of potential forest sector-based mitigation activities globally. The analyses conducted in this study contribute to the global understanding of forest sector mitigation options by clearly outlining economic aspects of the mitigation under various goals and over various time periods and by synthesizing the methods, tools, and datasets needed to quantify mitigation activities. An understanding of economically feasible and socio-economically attractive mitigation strategies or portfolios helps decision makers with long-term planning for land sector contributions to GHG emission reduction efforts, and with efforts to obtain the social license to implement mitigation strategies, which will require dialogue with various stakeholders.