Optimal forestry under climate policy

Climate change mitigation aims to reduce greenhouse gases in the atmosphere. Forest mitigates climate change by accumulating atmospheric carbon to biomass. This biomass can be used to various products which also act as a carbon sink. Carbon sequestration is the opposite of carbon emission, but not fully. Forest carbon storages are uncertain and temporal but the role of forests as temporary carbon storages still has value. However, climate policy must take this into account both in the implementation of policies and in the valuation of carbon sinks. The thesis consists of four articles and a summary chapter. Articles represent different perspectives of the forest sector and the use of forests and wood products to mitigate climate change. They cover the use of forests from the growth of trees to the use of wood products. In the first article we analyze with an age-class model how forest owners will change their forest management if there is a subsidy based on the forest carbon storage. The results show that enhancing investments for forest growth increases and that forest rotation will be longer. We also investigate how subsidies for silvicultural investment will affect carbon sequestration of the forest. The second article analyses wood consumption and HWP carbon stock in Finland until 2050. The main HWP carbon pool consists of products made of sawn wood. The HWP carbon pool in Finland seems to increase until 2050 even in the case of decreasing consumption of sawn wood. The third article deals with optimal forest management where the growth of the forest is described by a size-class model. The results show a feature on size-classified matrix models that significantly reduces the comparability of forest management results of these models. The optimal thinning intensity and rotation length of forest are highly dependent of the specification of the model. The fourth article analyzes the existing climate policy for forestry in the EU. Because the policy only applies to one period, we can use a simple two-period model to describe the impact of the policy. The results show that constraints on current climate policy design reduce the potential of using forests to mitigate climate change. The framework in the summary of the articles complements the conclusions in the articles and builds a view towards a more comprehensive conclusion for governance of forest sector to mitigate climate change.