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Forest Management and Climate Change

RJ Alig, Retired, USDA Forest Service, Pacific Northwest Research Station, Corvallis, OR, USA
ã 2013 Elsevier Inc. All rights reserved.

Glossary Silviculture The art and science of controlling the


Forest land Land at least 10% stocked by forest establishment, growth, composition, health, and quality of
trees of any size, including land that formerly had forests and woodlands to meet the diverse needs and values
such tree cover and that will be naturally or artificially of landowners and society on a sustainable basis.
regenerated. Timberland Forest land that is producing or capable of
Silvicultural system A planned series of treatments for producing crops of industrial wood and is not withdrawn
tending, harvesting, and reestablishing a stand. from timber utilization by statute or administrative regulation.

Introduction demand for forest products by consumers the desire to live


in amenity-rich settings) in analyses of projected future forest
Global climate change from a buildup of greenhouse gases conditions and landscapes.
(GHGs) poses physical, ecological, economic, and social is-
sues for forest management. Forest management is the science
Impacts
of growing, protecting, harvesting, and manipulating trees and
related vegetation to sustain ecological, economic, and social
Forest responses to climate change are expected to involve
values. Forest management is affected by climate change as
changes in forest location, the combinations of forest species
forest ecosystems transfer carbon from the air through photo-
and age classes on the landscape (i.e., forest compositions), and
synthesis and sequester it in trees and other ecosystem com-
growth rate and timber yield. These expected changes result
ponents such as the understory and soil. Such forest sinks
largely from climate-change-induced changes in temperature,
have a significant potential to help in mitigating climate
precipitation, and water availability; atmospheric CO2 levels;
change, while adapting to and being impacted by climate
and lengthening of the growing season. Although these general
change. Increases in forest growth are possible because of CO2
relationships are fairly accepted, a fair amount of uncertainty
fertilization from climate change, while alterations in tempera-
remains about the regional forest conditions in global circula-
ture and moisture can reduce growth in other cases. These chang-
tion models (GCMs) commonly relied on for economic stud-
ing forest conditions are expected to trace through to changes in
ies. Much of this uncertainty relates to ecosystem complexity,
forest management regimes, forest production practices, and,
the variety of ecosystem conditions involved, feedbacks that may
potentially, the uses of timberlands within the forest-products
mitigate or enhance forest changes, and the ability of ecosystems
sector. They also affect multiple forest-based goods and ecosys-
to adapt (including through human intervention). In one exam-
tem services such as biodiversity, recreation, water quantity and
ple of uncertainty because of complexity, there is a lack of agree-
quality, and habitat for fish, wildlife, and plants.
ment on the extent to which increases in atmospheric CO2 will
This article examines GHG impacts on forestry and adapta-
have a fertilizer effect on plants. Some believe that while in-
tion options. (The assistance of Darius Adams and Brent Sohn-
creased CO2 promotes plant growth, over large areas, limitations
gen in providing recommendations is acknowledged, along
in other inputs to plant growth (e.g., nitrogen or water availabil-
with Marjorie Victor’s assistance.) Examples are drawn from
ity) may reduce these increases. For example, nitrogen is required
research on US land and forest resource changes and the
for tissue growth and, even in the presence of elevated CO2,
potential interactions between the forestry and agricultural
limited nitrogen may limit increased growth rates.
sectors. Forest management options and their opportunity
Over large areas, it may take many decades for the impacts
costs will be affected by what happens in other sectors, such
of climate changes on forests to be evident. However, localized
as changes in agricultural land use. Research on climate change
impacts (e.g., warming in sensitive alpine ecosystems) may be
impacts on forest management is in its early stages, and the
evident much faster. Table 1 summarizes how climate change
emphasis is primarily on the timber component. Much of this
may affect the global forest sector over future time intervals.
review reflects this emphasis.
The near-term (to 2020), medium-term (2020–60), and long-
A key point that pervades this article is the importance of
run impacts (beyond 2060) are assessed.
integrated analyses when addressing climate-change issues for
forest management, including the biophysical, ecological,
and economic components. Changes in ecological processes
Examples of Impacts on Forests and Products
in forested ecosystems as a result of an altered climate may be
many, such as forest-productivity impacts, and the science is 1. Changes in growth and yield – over broad geographic areas,
still relatively young. Economic studies extend ecological re- previous research and available climate-change scenarios
search by explicitly recognizing human activities (e.g., the indicate that climate change is anticipated to sometimes

Encyclopedia of Energy, Natural Resource and Environmental Economics http://dx.doi.org/10.1016/B978-0-12-375067-9.00139-X 97


98 Microeconomics | Forest Management and Climate Change

Table 1 Ecological and economic implications of climate change on the forest sector over time

Short-term (2005–25) Medium-term (2025–65) Long-term (2065–2105)

Boreal • ↑ Productivity • ↕ Productivity • ↕ Productivity


• ↑ Risk of fire/natural disturbance • ↑↑ Risk of fire/natural disturbance • ↑↑ Risk of fire/natural disturbance
• ↑ Salvage; ↑ Timber supply • ↑ Expansion of species northward • ↑↑ Expansion of species northward
• ↑ Southern range displaced by • ↑↑ Southern range displaced by
more southerly forest types more southerly forest types
• ↑ Salvage; ↑ Timber supply • ↑ Salvage; ↑ Timber supply
Temperate • ↕ Productivity • ↕ Productivity • ↕ Productivity
• ↕ Timber supply, # Timber prices • ↑ Risk of fire/natural disturbance • ↑↑ Risk of fire/natural disturbance
• ↑ Movement of species northward • ↑ Movement of species northward
• ↑ Salvage; ↑ Timber Supply • ↑ Salvage; ↑ Timber supply
Tropical • ↕ Productivity • ↕ Productivity • ↕ Productivity
• ↑ Plantation establishment • ↑ Risk of fire/natural disturbance • ↑↑ Risk of fire/natural disturbance
• ↑ Timber supply to world market • ↑ Risks to plantations and natural • ↑ Risks to plantations and natural
forests forests
• ↑ Salvage; ↑ Timber supply • ↑ Salvage; ↑ Timber supply
World market • ↑ Supply from rising productivity • ↑ Supply from rising productivity • ↑ Supply from rising productivity
effect and the possibility of salvage and the possibility of salvage and the possibility of salvage
• # World timber prices • # World timber prices • # World timber prices
• ↕ Producer welfare • ↕ Producer welfare • ↕ Producer welfare
• ↑ Consumer welfare • ↑ Consumer welfare • ↑ Consumer welfare

↑, increases in indicator; #, decreases in indicator; ↕, both increases and decreases in indicator likely; double arrows indicate stronger effects likely.
Source: Adapted from Sohngen et al. (2010).

increase the growth and yield of timber. Changes in growth study indicated the possibility of a 10% increase in the
and yield are projected to differ by United States region, seasonal severity of fire hazard over much of the United
with the North-East generally projected to benefit; in- States. In addition, warmer temperatures in the Western
creased stresses in other regions, such as reduced water United States have already enhanced the opportunities for
availability and increased droughts, may reduce yields; insect spread across the landscape.
2. Land-use changes – influences of climate change on the
productivity of competing land uses, such as agricultural Significant uncertainty surrounds how such impacts will influ-
crop and livestock production, could affect forest area if ence individual forest stands, and this review summarizes re-
relative rents for competing uses are impacted; sults from aggregate analyses (e.g., large geographic region)
3. Species shifts – changes in forest type and tree species and draws on market-level modeling studies to estimate how
distributions could have a number of ecological and forest climate change can affect land and forest products markets. To
sector consequences. For example, losses in habitat area in project how future climate conditions may impact the forest
the United States were projected for the northernmost for- sector, economists must link expected forest changes to the
est types, including the maple – beech – birch, spruce – fir, inputs and parameters used in forest sector economic models.
and aspen – birch types (Figure 1). Conceptually, future climate change could impact both the
4. Dieback and disturbance regimes – stocks of current forest existing timber stands (the existing ‘stocks’ of resources) as
resources may be reduced through dieback that results be- well as the future incremental growth rates of existing and
cause of climate change. Dieback is typically modeled as a new timber stands (the ‘flows’). Mortality, as a result of fire
reduction in the suitability of growing conditions or as or insect disturbances or long-term changes in environmental
increased mortality from more frequent or more severe conditions, may result in losses in the existing stocks of forests.
disturbance. Dieback from growing condition change is At the same time, the ‘flows’ of future incremental growth in
anticipated to result from increased heat and reduced forest stands may increase or decrease as a result of the changes
water availability. One potential positive outcome of die- in growing conditions (e.g., temperature, precipitation, and
back is that timber producers can replant affected stands CO2) from climate change, as well as by any changing forest
with species or varieties appropriate for the new growing management practices in response. Stated differently, climate
conditions. Although extensive dieback could result in sub- change is expected to impact current forests through magnified
stantial damage if forests were unable to provide their cur- disturbance regimes (e.g., fire, insects, and disease) and future
rent levels of ecosystem services, natural systems tend to forests through changes in growth rates, mortality rates, and
respond quickly to disturbance. Natural disturbances such seed production (especially in unmanaged stands).
as fire, insects, and disease have a large impact on forests Humans as consumers are connected to forested ecosystems
across the United States, and climate has a large impact on through the market (e.g., timber) and nonmarket (e.g., recrea-
the occurrence, frequency, and intensity of these natural tion opportunities) products and services they receive from
disturbances. It is difficult to estimate the precise impact forests. Changing forest conditions impact the supply of tim-
of climate change on these disturbances; however, one ber available for use in the production of wood products.
Microeconomics | Forest Management and Climate Change 99

FIA-Current RF-Current

Whte/Red/Jck
Sprc/Fir
Lnglf/Slsh
Lobly/Shrtlf
Oak/Pine
Oak/Hikry
Oak/Gum/Cypr
Elm/Ash/Ctnw
Map/Bch/Brch
A spn/Brch
No Dat/NoFor
GCM3Avg Lo PCM Lo

GCM3Avg Hi HADLEY Hi
Figure 1 Projected forest type shifts in the Eastern United States as a result of climate change. Data source: Climate Change Tree Atlas: http://www.
nrs.fs.fed.us/atlas/tree/ft_summary.html.

Changes in supply of wood products translate into short-term affect forest and agricultural production, with interactions be-
changes in the prices of wood products, all else being equal. tween land and commodity markets for timber and agricul-
Increases in the price of wood products may reduce the con- tural products leading to changes in commodity prices in the
sumption of wood products generally and the substitution of forest and agricultural sectors.
some wood products (e.g., dimensional lumber) with others Producers of wood products and timber may also change
(e.g., engineered wood products) or with nonwood products their practices in response to changing forest conditions. Tim-
(e.g., steel 2  4s). Conversely, declines in wood product price ber producers may alter their management strategies to take
would likely increase the consumption of wood products, all advantage of changing growing conditions and timber mar-
else being equal, with possible substitution of wood products kets. For example, if incremental growth rates experience a
for nonwood products. marked increase, timber producers may extend rotation
Land-use theory suggests that allocation of a unit of land lengths to take advantage of additional revenue from growth
among major uses tends to be determined by the highest that could be generated, net of forest management costs. Man-
economic return among alternatives, as represented by land ufacturers may alter the types of products they produce in
rents. Climate change by impacting productivity among uses response to changes in the forest supply (e.g., a greater reliance
can affect land rents for competing uses. Land-use shifts can on producing dimension lumber relative to engineered wood
100 Microeconomics | Forest Management and Climate Change

products or vice versa.) Over longer timeframes, the wood is generally projected to increase and stumpage prices are pro-
products sector may change their timber processing infrastruc- jected to decline. This results in lengthened timber rotations
ture and material handling systems in response to changes in relative to current practice. Timber rotation is the length of
the flow and quality of supplied timber. time for which producers allow timber to grow before harvest,
The patterns of forest ownership also factor into future and stumpage is the timber standing in the forest. If the oppo-
forest management under climate change. Land ownership site climate impact occurs and forest productivity declines,
may influence forest management behavior because of differ- rotation lengths are expected to shorten, particularly over the
ent initial endowments in resources, differential impacts to short term. Rotation lengths shorten because timber supply is
growing conditions on lands in differing ownership groups, reduced (leading to increased stumpage values) and the annual
varying ownership objectives and responses to incentives, and growth of trees (representing the opportunity cost of foregoing
because different ownership groups may respond differently to future additional stumpage value) is less than under previous
changes in forest growing conditions. Private timberlands pro- growing conditions. In addition, timber rotation lengths could
vide the major part of the timber currently produced in the shorten if disturbance regimes increase markedly, reducing tim-
United States, with much of the timber coming from private ber supply, or because producers choose to harvest sooner to
lands in the South. If climate change were to have greater avoid risk of timber losses due to disturbance. Climate change
negative impacts on growth and yield on private lands, this may increase the high variability that is often associated with
could magnify the consequences for US timber production. natural disturbances and complicate any ecological forest man-
Private individuals and corporations own forestland for a agement guided by emulating natural disturbance processes.
variety of reasons. Individuals who own timberland tend to do Under climate change, researchers project that the global
so for reasons other than timber production, such as esthetics, forest sector will increase harvest levels by 5–6% (relative to the
privacy, and recreation. Private individuals are much less likely baseline and depending on scenario and region) for the 1995–
to have written forest management plans. Corporations tend to 2145 period. Most of the gains in timber harvest, over the next
manage land for financial returns, including returns from tim- several decades, occur in the low midlatitude forests, particu-
ber production. Because their ownership objectives and man- larly in South America (10–19%) and India (14–22%). In the
agement capacities differ, the responses of private individuals next few decades, North American harvests (Canada and
to changes in forest conditions may be different from private United States combined) are projected to decline by about
corporations. Private corporations may respond aggressively 1%. This decline reflects some dieback and general productiv-
with mitigating activities to changing forest conditions and ity losses projected for Canada. Global timber harvests in the
disturbance, while private individuals respond more passively. latter half of the century are projected to have a more substan-
Vertically integrated firms were greatly reduced in number, tial increase, relative to the baseline, of between 18% and 21%.
with much area transferred to timber investment management These later gains reflect the increased productivity of forests
organizations, real estate investment trusts, and other corpo- and increased demand for wood products in response to de-
rate owners. It remains to be seen if the land will be managed creased prices. Most of this later increase will be driven again
differently under the new owners, some seemingly with differ- by the low midlatitude forests; however, North American har-
ent tenure or time horizons, and how they respond to climate vests are projected to be about 14% above the baseline during
change (e.g., planting newly suitable species and responding to that period.
increased disturbance regimes). One key difference in studies pertaining to global timber
harvest levels is how timber harvests are predicted for subtrop-
ical plantation regions, where technology improvements are
Timber Management Under Climate Change
increasing the yield of forests substantially over long time
With climate change, forest management activities by the dif- periods. In contrast, declining timber-harvest intensities are
ferent owners acting as producers, including choices of planting projected for currently inaccessible forests in tropical and bo-
stock, thinning regimes, and rotation lengths and harvesting real regions. One reason for this decline in harvesting activity
practices, could be changed to take advantage of both new in boreal regions is that prices are projected to stabilize over
growing conditions and changes in forest sector markets. For time. If prices remain constant, incentives are smaller to ex-
example, private timberland owners suffering productivity de- pand infrastructure for harvesting timber in the boreal region.
clines as a result of climate change (and wishing to maintain A short-term increase in harvests in boreal regions is possible in
current production levels) would need to intensify manage- part because of the price increases and the fairly large stocks
ment systems (e.g., planting improved stock, or conducting and low costs of accessing stocks in many boreal regions.
more aggressive thinning, or fertilizing activities.) Conversely,
landowners facing increased productivity may need to change
Economic Changes
management regimes to accommodate increased growth or to
take advantage of other market opportunities (e.g., carbon In general, forest sector prices are expected to decline as a result
offset payments). In addition to forest management activities of climate change. Global timber prices, under all scenarios
during the rotation, harvesting choices (e.g., rotation ages and (including those with dieback), decline relative to the baseline
silviculture systems) could also be modified in response to in one study. Dieback could mitigate price changes to some
changing growing conditions or forest product markets. extent. As the climate scenarios represent more hotter temper-
Timber yields of forests are expected to increase with any atures/higher emissions, prices are projected to decline farther
fertilization effect of CO2 and a longer growing season. In below the baseline because timber productivity continues to
those places where timber yields increase, timber production increase in modeled scenarios.
Microeconomics | Forest Management and Climate Change 101

For US scale studies, prices for timber are projected to impacts could become large, if climate change were to involve
decline slightly, relative to the baseline, in scenarios where significant shifts in regional weather patterns or dieback in
the South experiences no change in growth and the North existing stands with large losses in timber stocks.
experiences increased productivity. If the South experiences a
1% loss of productivity and the North experiences a corre-
Summary of Impacts
sponding gain in productivity, prices are projected to increase
slightly (<1%). In cases where both the regions of the United When considering how the ecological effects of climate change
States experience a loss in productivity, greater price increases translate into economic effects, it is convenient to categorize
are projected. Assumptions about international trade can affect the response into three general areas: forest productivity
the results, especially imports from Canada. changes, ecosystem disturbances, and changes in forest species
Climate change is projected to generally lead to faster grow- distribution. Productivity changes are adjustments in the pro-
ing trees that become larger in a shorter period of time. Further- ductivity of forests that alter the growth rates of timber species
more, at least one study suggests that softwoods may (in either a positive or a negative way) and can also lead to
experience a disproportionately positive response. These fac- land-use shifts. Impacts on forests arise from increases in at-
tors combine to suggest some potential differences between mospheric CO2 concentration, changes in temperature re-
sawtimber and pulpwood production in a climate-changed gimes, and variations in annual rainfall patterns. Changes in
environment. Pulpwood is typically produced from trees that disturbance influence the standing stock of trees, and include
are too small or not of high enough quality to produce saw- pest infestations, forest fires, windthrow, and ice damage.
timber. In the Northern United States, much of the pulpwood Finally, changes in species distribution result from shifts in
is produced from hardwood species. As climate change pro- climate, which ultimately alter the optimal geographic location
duces trees that can become larger more quickly, this could of different timber species. Although uncertainty remains re-
potentially displace hardwoods north to Canada and make it garding the physiological and disturbance responses of US
feasible for productive southern pine species to grow in the forests to climate change, general agreement exists among
North, such that the production of pulpwood is projected to available economic studies in projecting that climate change
decline and the prices to rise. will lead to aggregate forest yield increases globally and for
portions of the United States. These yield increases will lead to
increased timber production, which will result in price de-
Consumers and Producers Welfare under Climate Change
clines. Broadly, the studies to date generally indicate that the
The basic relationships between changes in forest productivity forest sector (both globally and in the United States) is fairly
from climate change and consumer and producer welfare are resilient to changes in forest stocks and growing conditions
fairly consistent. If climate change makes forests more produc- resulting from the modeled climate-change scenarios to date.
tive, then timber prices will fall, consumers will benefit (con- Forest sector prices and consumer and producer welfare
sumer welfare will rise relative to the baseline), and (forest changes are generally projected to be relatively small. The
product) producers in most cases will lose (producer welfare studies are generally consistent in projecting that total welfare
will decline from the baseline). The opposite will occur if will increase relative to the baseline, with consumers better off
climate change makes forests less productive. In nearly all re- with increased supplies. At present, the forest sector (globally
sults, under a positive change to forest productivity, total wel- and in the United States) is operating in a manner that reflects
fare (the net combination of consumer and producer welfare) a diverse arrangement of resources, processing capacity, and
in the United States is projected to increase slightly from the consumer demand. Climate change would likely impact those
baseline because the gains to consumer welfare are greater than arrangements, and economic theory and the output of eco-
the losses to producer welfare. Although welfare gains are nomic models suggest that the forest sector would adapt
projected in aggregate for the United States as a whole, some accordingly over time. However, the specific impacts on forests
locations and groups may suffer losses. Within the United from climate change at regional or local scales are highly
States, the South and West regions and timber and wood uncertain.
product producers are projected to suffer welfare losses under One difficult aspect associated with modeling climate
some climate scenarios. Although most studies project in- change impacts on forests is that effects will likely differ be-
creased productivity (and yield in forests), these productivity tween existing trees and trees regenerated in the future (natu-
gains are not strong enough to offset the lower prices. rally or planted). Native forests are adapted to the local climate
Because, in part, consumers can change their purchasing and the variability of that climate. Changes in the climate will
behavior and choose substitute goods, the welfare of forest- affect these existing trees by changing growth rates, tree mor-
related producers is about ten times as sensitive to changes in tality, and seed production for the next generation of forests.
growth and yield (such as in response to climate change) as For existing trees, other climate change impacts could include
consumer welfare. If existing forest stands suffer mortality increased risk of forest fire and mortality associated with in-
because of changes in climate conditions and increased distur- creased insects and diseases. Trees planted in the future, how-
bance, producers experience greater losses. On the basis of the ever, will grow entirely in an environment with altered climate;
magnitude of changes in forest yields because of climate their response to these climate changes could include surprises
change as estimated by ecological models, the authors are led in terms of the volume growth, product yield, and product
to expect relatively small aggregate welfare and economic im- quality. Economic impacts resulting from growth changes
pacts at a national level. At present, however, these forest-yield- will be further delayed because of the length of forestry rota-
impact estimates have a wide range of uncertainty. Short-term tions (generally two or more decades). The current projections
102 Microeconomics | Forest Management and Climate Change

for the forest sector under climate change are based on the private forest landowners affecting adaptation are options to
existing studies that were completed using the information shift land uses. Lead times differ regarding shifting production
and models available at the time. One important uncertainty from one crop or cropping method to another, as agricultural
in considering the existing model results is the impact that rotations are typically one to several years, compared to one to
unaccounted-for dieback or increased levels of disturbance several decades in forestry. This affects the likely mix of affor-
may have on the expected responses of the forest sector to estation, reforestation, and deforestation under different
climate change. global climate-change scenarios for the forest industry and
This article reflects the relatively recent emerging body of nonindustrial private owners – groups that tend to have nota-
knowledge about impacts of climate change on forests and bly different land management objectives. If climate-change
forest management, with an emphasis on the timber compo- results in relatively higher agricultural productivity per acre,
nent, and substantial uncertainty about impacts of climate some acres may be converted from forests to agricultural use.
change on ecosystem services. A number of different types of Such changes would alter the supply of products to national
ecological and timber models have been developed over the and international markets, changing the prices of forest prod-
years, ranging from local to regional and global. The ecological ucts and the economic well-being of both consumers and pro-
models provide insights into a host of potential effects that ducers. If timber prices rise, producers could gain. Consumers,
climate change may have on forests, including tree growth in turn, may shift their patterns of consumption between forest
effects, carbon fertilization, disturbances and dieback, and and nonforest products.
other effects across different regions. Other environmental Compared to the baseline (without climate change) for a
issues such as effects on biodiversity, water catchments, wild- national assessment of climate change conducted in the year
life, and recreation are not discussed here, as the uncertainty on 2000, under climate change and associated ecological scenar-
these issues seems to be rather high. Benefits to landowners ios less cropland is projected to be converted to forests. With
from owning forests can include nonfinancial considerations, economic models suggesting that the overall area of forests in
such as wildlife, esthetics, and other benefits, or revenue from the United States is projected to expand less than the baseline
other activities such as leases for hunting rights. Diverse forest under climate-change scenarios, another adaptation possibility
management regimes are in place, especially for the large involves the forest type or species composition of forests. Bio-
heterogeneous nonindustrial private ownership, which often geographical models (although they do not account for price
has quite limited active forest management. Climate change effects) suggest that the composition of forests is also likely to
will likely increase the frequency and intensity of distur- change. In particular, potential habitats for trees favored by
bances, such as fires or hurricanes, and affect associated cool environments are very likely to shift north. Eastern land
costs and losses including government and homeowner ex- area associated with aspen, sugar maple, and birch, for exam-
penditures for prevention and mitigation activities and home- ple, is likely to decline, whereas oak/hickory and oak/pine
owner losses in property value. Trees in urban areas can also forests could possibly expand. As a result, the type of forests
help to reduce cooling costs by providing shade, and offer that individuals see on the landscape may change, altering the
other benefits. amount of carbon stored in forests and the type of wood
products produced across these landscapes.
In addition, forest producers may adapt in how they
Adaptation address changes through timber harvest (salvage of dead or
dying trees), rotation age, and other forest management in
Adaptation Alternatives response to changes in natural disturbances such as fire, insects,
The forest sector has adaptation or adjustment mechanisms and disease. In other cases, forest-management strategies could
that may help to mitigate climate change impacts, including involve replanting strategies using different planting stock
land-market adjustments, interregional migration of produc- that is expected to fare better under climate change. Forest
tion (e.g., northerly migration of productive capacity), substi- producers could also examine altered management for future
tution in consumption between wood and nonwood products stands as compared to existing ones, regarding activities such as
(reflected in overall growth in wood product use) and between fertilization and thinning.
sawtimber and pulpwood, and alteration in forest manage- In the aggregate, where climate change is projected to in-
ment among owners and regions. Forest management options duce yield increases, consumers are found to benefit but not
include types of site preparation and planting stock, fertiliza- producers. Projections of yield decreases have the opposite
tion, thinning, salvage of dead or dying trees, rotation age, and effect. Producers’ income from forestry activities, therefore,
harvesting patterns among owners and regions. appears to be most at risk from climate change. Producers
would change both the types of management they practice
(planting, thinning, and other cultural treatments) and the
ages at which they harvest trees, depending on the type of
Economic Linkages
owner (private or public).
Understanding the role of adaptation in forestry is important For decision makers, the long time periods between germi-
for assessing the overall impact on markets. Using the example nation of a tree seed and maturation of a forest crop mean that
of land-use shifts as one possible adaptation option, timber adaptation may take place at multiple times during a forestry
and wood product markets and forest landowners can adjust rotation. The adjustment dynamics will be complex, in part,
and adapt to climate change in ways that act to limit economic because better information on climate change and its effects
effects in the forest sector. Among choices for the millions of will emerge over the course of a rotation. Unforeseen
Microeconomics | Forest Management and Climate Change 103

mitigation actions may also take place during a rotation, af- Ownership and Scale Differences
fecting the impacts of climate change on forests and forest
Both reactive and proactive approaches may be adopted to
management. In forestry, longer rotation lengths complicate
cope with the impacts of climate change at scales below the
the development of data on actual biological responses of trees
region, such as at the forest or stand level. For example,
and forests to global change. Those rare long-term studies of
National Forests are typically comprised of many stands and
tree growth have provided insights into relationships between
range widely in size, within a patchy ownership pattern. For
trees and climate (particularly drought impacts). However, the
such public lands, a reactive approach in adaptation might be
uncertain effect of increased carbon dioxide on trees is being
justified if uncertainty or costs are considered very high relative
studied in comprehensive long-term experiments on how trees
to the expected impacts and risks or if significant cost savings
behave when exposed to alternative CO2 levels and other
and benefits would result if interventions are implemented
stresses (such as ozone). Little is known about how these
only after a climate-related disturbance takes place (e.g.,
experimental results on individual trees generalize to stand,
replanting an area with more fire- or drought-resistant tree
forest, and regional levels or to other tree species.
species after a wildfire or drought-induced insect outbreak.)
The multifaceted concept of sustainability involving
In many cases, however, proactive approaches – incorporating
sustenance of ecological, economic, and social values over
adaptation options into management and planning processes
the long term also implies that developing adaptation strate-
now, before climate-related events induce major ecosystem
gies would need to take account of the demographic and other
changes – may be less expensive and more effective for achiev-
impacts resulting from climate change, which are unclear be-
ing current forest-management goals. A portfolio of forest-
cause of uncertain future changes in population and income,
management strategies may be needed so that the right tool
land use, trade in wood products, consumption of wood prod-
can be applied to the specific management context. A single
ucts, recreation patterns, and human values. For example, if
approach to adaptation will likely not work across the diversity
human needs from forests increase over the next 100 years and
of ecosystems within the more than 180 National Forests. The
imports are limited, the socioeconomic impacts from climate
portfolio could include both short- and long-term adaptation
change would be greater than if needs were low or products
options, many of which are modifications of management
could be imported from areas where climate might increase
practices and tools already used by the USDA Forest Service
forest growth. As with forest management, adaptive manage-
(see Table 2 for examples of adaptation options). Implemen-
ment to address the uncertainties of sustainability under climate
tation of some adaptations will depend in part on the amount
change could include highlighting uncertainties, developing
of certainty about the trajectory of climate change.
and evaluating hypotheses regarding systems outcomes,
and structuring actions to evaluate these ideas. Adaptation to
Summary
climate change could strive to have more efficient learning and
monitoring, while recognizing that we operate with significant Adaptation alternatives in the forest sector could result in
levels of uncertainty. reducing economic impacts from climate change. Options

Table 2 Examples of lower-scale forest-management guidelines and adaptation options, for National Forests in the United States, suggested
by the USDA Forest Service

Goal Desired or intended outcome Possible climate-change impacts Adaptation options

Restore, sustain, Maintain forest health, productivity, diversity Longer, warmer growing seasons Reduce fuel loads in forests
and enhance and resistance to severe disturbances Altered fire regimes; shifts in Increase use of wildland fire
national forests seasonality of hydrological Enhance the early detection and
processes; intense droughts response strategy associated with
non-native species
Conserve open Maintain the environmental, social, and Large-scale forest dieback or Provide technical assistance to urban
space economic benefits of forests, protect these vegetation type conversions as a foresters to sustain urban trees
resources from conversion to other uses, and result of more frequent extreme Develop corridors for species
help private landowners and communities events migration and habitat protection
manage their land as sustainable forests Altered landscape and
successional dynamics.
Increasing fragmentation of forest
ecosystems and wildlife habitat
Sustain and Maintain high-quality outdoor recreation Increased air and stream Evaluate recreational impact on
enhance opportunities in national forests available temperatures; reduced ecosystems under a changing
outdoor to the public snowpack climate
recreation Altered in-stream flows Expand recreational opportunities
opportunities across all four seasons
Redesign roads and trails to withstand
increased rainfall intensity

Source: Adapted from Joyce LA, Blate GM, Littell JS, et al. (2008) National forests. In: CCSP (ed.) Preliminary review of adaptation options for climate-sensitive ecosystems and
resources, pp. 3-1–3-127. Washington, DC: USEPA.
104 Microeconomics | Forest Management and Climate Change

include land-use changes, interregional migration of produc- actual time pattern of change is more complex. The uncertainty
tion (e.g., northerly migration of productive capacity), substi- in forest-growth impacts leads to similar ambiguity in deriva-
tution in consumption between wood and nonwood products tive studies of the effects of global change on the industries and
(reflected in overall growth in wood product use) and between consumers that use the forest resource.
sawtimber and pulpwood, and alteration in stand manage-
ment. For example, if climate-change results in relatively high
Projections of Forest Yields across Different Scenarios
agricultural productivity per acre, some acres may be converted
from forests to agricultural use. Such changes would alter the This section illustrates different measures used to broadly esti-
supply of products to national and international markets, mate changes in forest yields, in the context of ecological
changing the prices of forest products and the economic models linked to climate models. To date, ecosystem models
well-being of both consumers and producers. New technolo- have not been fully linked to economic or management
gies yet to be developed could represent another method of models to assess the implications of climate change on man-
adapting to climate change, which could help the forest-based aged ecosystems. This can misstate implications of climate
economy to be more resilient in the face of events associated change in particular locations because these purely natural
with climate change. ecosystem results do not account for human adaptation. Ad-
Studies of adaptation in the forest sector generally link aptation could tend to reinforce positive effects of climate
estimates from ecological models to timber models and the change and mitigate against negative effects.
geographic distribution of effects from climate change (e.g., Estimates from models can vary notably, in terms of both
where changes in precipitation and temperature occur) and magnitude and direction of change. Ecological models within
over time is one of the most uncertain aspects of climate the last decade were used to project ecological changes at a level
modeling. This suggests high uncertainty surrounding the re- of disaggregation or scale (e.g., 0.5 grid cells) somewhat similar
gional distribution of forest dieback effects and how forest to that of counties used in some economic studies. One study of
producers may adapt. If dieback does occur, forest producers climate change and land-use change involving the forest and
may adapt through timber harvest (salvage of dead or dying agricultural sectors used an ecological model that when linked
trees), rotation age, and other forest-management activities in to climate models estimated changes in aboveground carbon.
response to changes in natural disturbances such as fire, in- Aboveground carbon is a stock variable that represents the car-
sects, and disease. In other cases, forest-management options bon in live components of trees at a given time period. If above-
could involve replanting strategies using different planting ground carbon is increasing, then gross growth exceeds mortality
stock that is expected to fare better under climate change. in forests (and there is no harvesting in ecosystem modeling),
Forest producers could also examine altered management for and if aboveground carbon is decreasing then mortality is high
future stands as compared to existing ones, regarding activities and it exceeds gross growth. Within the ecological model that
such as fertilization. produced the results in Table 3, natural mortality is driven by
forest fires. Table 3 illustrates the range of net primary produc-
tivity and above ground carbon impacts coming from different
Uncertainty of Outcomes across Space and Time combinations of GCMs and ecological models, including some
differences in signs of estimates. Furthermore, complexity of
Although several studies have attempted to estimate the bio- subregional forest growth impacts (e.g., elevational influences)
logical effects of climate change on forests, the magnitude and means that impacts can be highly diverse across regions and
direction of these effects remain uncertain. For example, one within any given region. The exact way that a given change in
study using six biogeographic simulator configurations under a the temperature/moisture/CO2 regime would impact forest
single climate scenario found that the total inventory volume growth is a quite complicated process.
of US Southern pine ranged from 28% above to 29% below
base levels. For Western United States Douglas-fir, their esti-
Response Function Approach to Evaluate Consequences
mates ranged from 35% above to 35% below base levels.
of Climate-Change Scenarios
Comprehensive experiments have not been completed on
how trees and forest stands behave over long time periods Given the uncertainty of estimates of climate change on forest
when exposed to alternative climates. Observations on existing yields, one approach is to examine a set of response functions,
forests cannot be used with confidence because temperature/ instead of examining a single scenario or group of scenarios.
moisture/CO2 regimes of the type that may be associated with The response functions summarize model projections of an
future climate change are not observable. Little is also known array of measures of forest sector performance as stimulated
as well about how experimental results on responses of indi- by a wide variety of changes in forest growth. In one study, 481
vidual trees generalize to stand and forest levels. Research to growth scenarios were run to compute model response,
improve estimates of forest growth impacts continues, but a designed to span both limited cases and the extremes of po-
comprehensive understanding may emerge only gradually. The tential climate-change impacts. Parameters for the response
specific forest changes at regional or local scales are highly functions were estimated using statistical regressions, employ-
uncertain. Dynamics aspects are also important, in that forest ing standard methods of ordinary least squares. Applying these
rotations can involve two or more decades and often double or response functions, analysts can explore particular climate-
triple that time period in the west. Compared to studies in the change scenarios and rapidly generate projections of the asso-
agricultural sector, knowledge of the biological responses in ciated economic effects as new findings arise on biological
the forest sector to climate change is more limited and the growth impact. The rest of this section illustrates how response
Microeconomics | Forest Management and Climate Change 105

functions can be used to provide specific and general charac- yields for softwoods and hardwoods; and the fourth one is S-1,
terizations of impacts. N þ 1: a negative 1% reduction in Southern yields for soft-
For specific climate-change scenarios, the response func- woods and hardwoods and a positive 1% change in Northern
tions can be used to consider the potential variability in forest yields for softwoods and hardwoods. There is no S þ1 case,
sector impacts of climate change across a broad range of pos- because at the time of the study, none of the currently available
sible outcomes. An example of such an application is the use of climate-change projections suggested any expansion in forest
simple growth-change scenarios involving mechanically in- growth in the South, which was one of the few areas of agree-
creasing or decreasing growth in the Northern and Southern ment among projections.
United States by fixed percentages. Table 4 shows the out- Results from the response-function study suggested that the
comes of this for a plus and minus 1% growth impact for two overall market welfare impacts of climate change on the forest
selected projection decades. Forest growth estimates in the sector may be relatively limited. In considering this result, note
North (N) and South (S) were adjusted each decade in the that existing regional variation in climate and yields across the
projection, where the increment or decrement could vary by United States as a whole far exceeds the likely variation caused
region. Table 4 shows four scenarios, with the results com- by the simulated climate change. This was true when the re-
pared against a base case of no change in yields because of searchers increased the growth multiplier to 20 in all the sce-
climate change. The first scenario is S-1: a negative 1% change narios. Research in the agricultural sector has reached similar
each decade in Southern yields for softwoods and hardwoods, conclusions, suggesting that producers and consumers may act
and no change in Northern yields; the second S-1, N-1: nega- to contain the aggregate impacts.
tive 1% reduction in Southern and Northern forest yields for Furthermore, the forest sector has adaptive adjustment
softwoods and hardwoods; the third is S-0, N þ 1: no change in characteristics in response to the modeled climate change.
Southern forest yields, and a positive 1% change in Northern Options include regional migration of production, substitution

Table 3 Changes in net primary production (NPP) and above ground carbon relative to 2010, for IPCC A1 and A2 scenarios produced with an
ecological model (MAPSS) and three climate models (CSIRO, MIROC, and Hadley), averaged for the entire United States

Climate Model Scenario Measure Year

2020 (%) 2030 (%) 2040 (%) 2050 (%) 2060 (%)

CSIRO A1b NPP 4.2 4.3 4.6 3.1 4.9


Aboveground C -0.8 3.1 8.1 4.5 8.8
A2 NPP 0.7 5.2 0.7 5.4 2.2
Aboveground C 1.3 6.3 0.0 0.7 3.6
MIROC A1b NPP 0.5 -2.5 -1.1 -4.3 -3.9
Aboveground C -1.4 2.6 1.6 3.3 14.2
A2 NPP 0.1 2.2 -3.0 -2.0 0.5
Aboveground C -2.6 1.0 6.1 -2.9 -3.6
HADLEY A1b NPP -1.1 0.5 2.7 6.0 -2.6
Aboveground C 1.7 -1.0 -1.9 7.2 0.3
A2b NPP 0.3 4.8 4.4 3.2 2.4
Aboveground C 6.5 2.8 3.8 10.1 8.1

Source: Adapted from Haim D, Alig R, Plantinga A, Sohngen B (2011) Climate change and future land use in the United States: An economic approach. Climate Change Economics
2(1): 27–51.

Table 4 Examples of sectoral effects in terms of US softwood sawtimber prices and production levels across four scenarios of regional variation,
using plus and minus 1% timber yield growth impacts for selected projection decades

Measure Projection decade Change from base

S-1, N0 (%) S-1, N-1 (%) S0,N þ 1 (%) 1,N þ 1 (%)

Softwood Sawtimber Price First Decade Change 0.470 0.710 -0.260 0.220
Fifth Decade Change 1.010 2.020 -0.890 0.060
Softwood Sawtimber Production First Decade Change -0.150 -0.220 0.070 -0.080
Fifth Decade Change 0.220 -0.180 0.440 0.670

Note: S, South; N, North; Scenarios are S-1: a negative 1% change each decade in Southern yields for softwoods and hardwoods, no change in Northern yields; S-1, N-1: negative 1%
reduction in Southern and Northern forest yields for softwoods and hardwoods; S-0, N þ1: no change in Southern forest yields, and a positive 1% change in Northern yields for
softwoods and hardwoods; and S-1, N þ1: a negative 1% reduction in Southern yields for softwoods and hardwoods and a positive 1% change in Northern yields for softwoods and
hardwoods. There is no S þ1 case.
Source: Adapted from McCarl B, Adams D, Alig R, Burton D, Chen C (2000) Effects of global climate change on the U.S. forest sector: Response functions derived from a dynamic
resource and market simulator. Climate Research 15: 195–205.
106 Microeconomics | Forest Management and Climate Change

in consumption between wood and nonwood products and Summary


between sawtimber and pulpwood, and the ability to alter the
Estimates of impacts of climate change on forest yields have a
intensity of forest management (e.g., rotation age, see Figure 2)
wide range of uncertainty. Ecological and climate models ex-
among owners and regions.
amining the same scenario can show wide variation in pro-
However, as stated in earlier sections, this does not mean
jections. Response functions provide summaries of the
that there would be no distributional impacts. Shifts in eco-
projected influence of forest growth rate alterations on eco-
nomic welfare would be expected among the various groups
nomic performance in the forest sector. The response functions
participating in the market. Some could gain, and some could
may be used to evaluate the consequences of specific scenarios
lose. Producers’ welfare sensitivity was roughly 10 times
of forest climate change and to revise such estimates as new
(in percentage terms) that of consumers’ welfare. When yields
findings on climatic effects arise.
are reduced, producers’ welfare shows gains, while consumers’
Forest sector responses or adaptation to climate change
welfare shows losses. With the demand for forest products
could act to reduce market-related impacts. For example, ag-
being fairly inelastic, small percentage increases in output lead
gregate sectoral welfare effects as estimated by consumers’ sav-
to larger percentage changes in prices, which lowers producers’
ings plus producers’ profits are relatively limited even under
welfare (profits) but increases consumers’ welfare, so that they
extreme scenarios. This arises because of marked economic
can consume more at a lower price. Furthermore, climate
welfare shifts between producers and consumers. Forest yield
change may portend some major dislocations for producers
increases from climate change were found to benefit con-
and cause widespread structural adjustment if climate-change
sumers but not producers, while yield decreases have the
stimulates notably higher forest yields.

Average rotation age in the north


0.3

0.2
Percent change

0.1

–0.1

-0.2

–0.3
0 5 10 15 20 25 30 35 40

Average rotation age in the south


0.2

0
Percent change

–0.2

–0.4

–0.6

–0.8
0 5 10 15 20 25 30 35 40

Years Since Onset of Climate Change


Figure 2 Effects of simple plus and minus 1% growth change scenarios on forest management (rotation age) at a regional scale, showing changes
over time for years since onset of climate change (adapted from McCarl B, Adams D, Alig R, Burton D, and Chen C (2000) Effects of global climate
change on the U.S. forest sector: Response functions derived from a dynamic resource and market simulator. Climate Research 15: 195–205). Note: The
no climate-change baseline is the zero line in both charts. Climate-induced reductions in southern yields lead to shorter timber rotations. In contrast,
higher forest growth in the North leads to longer rotations at first. The South’s three –1% scenarios all show shortened rotations, as compared to the
zero change scenario.
Microeconomics | Forest Management and Climate Change 107

opposite effect. The forest sector demonstrates adaptive adjust- forests in urban areas (e.g., cooling effects); approximately
ment characteristics, including regional migration of produc- 80% of the US population is in urban areas.
tion, substitution in consumption between wood and Changes in ecological processes in forested ecosystems
nonwood products and between sawtimber and pulpwood, from an altered climate may be many (e.g., forest productiv-
and the ability to alter the intensity of forest management ity impacts), and the science in this area is still relatively
(e.g., rotation age) among owners and regions. young. Economic studies extend that ecological research by
explicitly including human activities (e.g., the demand for
forest products by consumers, the desire to live in amenity-
Conclusions rich settings) in analyses of projected future forest conditions
and landscapes. With large-scale drivers, substantial uncer-
Forest management has evolved as our knowledge of forests tainty about the timing and location of impacts from climate
has advanced, and climate change as an emerging issue may change on forests complicates the provision of guidelines
increasingly impact forest-management decisions and some for forestland owners in managing their forests, often
owners may rely more on adaptive management approaches over multidecades for one rotation, and goals of robustness
to address the substantial uncertainty. Scientists have used and resilience in terms of promoting fully functioning
economic models to trace changes in forest growth as a result forests can aid in addressing increased stresses in the future.
of climate change to changes in behavior within the forest With significant uncertainty about the amount of GHGs that
products sector, drawing on ecological research for growth impact will be emitted into the atmosphere and resulting effects on
estimates. Climate change may alter the productivity of forests, climate and subsequently on forests typically managed
shifting resource management, economic processes of adapta- under long rotations, managers can monitor trends and pro-
tion, and ultimately forest product harvests both nationally and jections as they factor improved information into decision-
regionally. In regions where climate change reduces timber making and forest-management programs and adjustment of
growth, smaller timber volumes will be available for harvest in silvicultural system planning.
both existing forest stands and in those regenerated in the future.
The reverse would be true in regions experiencing increased tim-
ber growth. In addition, differential impacts of climate change in
See also: Climate Change and Policy: Economics of Forest
forestry and agriculture could lead to land-use shifts as one pos-
Carbon Sequestration as a Climate Change Mitigation Strategy;
sible adaptation strategy.
Media: Biological: Reducing Emissions from Deforestation and
Additional carbon in the atmosphere could enhance the
Forest Degradation; Microeconomics: Economic Analysis of Forest
growth of trees (the so-called carbon fertilization effect) in
Products Markets.
some areas. The distribution of the climate effects geographi-
cally (e.g., location of changes in precipitation and tempera- Further Reading
ture) and temporally is one of the most uncertain aspects of
climate modeling. This includes high uncertainty surrounding Adams DM, Alig RJ, McCarl BA, Callaway JM, and Winnett SM (1999) Minimum
cost strategies for sequestering carbon in forests. Land Economics 75(3):
the regional distribution of forest dieback effects. A response-
360–374.
function approach could aid in evaluating consequences of Alig RJ, Adams D, Joyce L, and Sohngen B (2004) Climate change impacts and
scenarios of forest climate change and would need to be adaptation in forestry: Responses by trees and markets. Choices 19(3): 1–7.
updated as new findings on climatic effects arise. In addition, Alig R, Adams D, and McCarl B (2002) Projecting impacts of global climate change on
climate change occurs within a matrix of other changes within the US forest and agriculture sectors and carbon budgets. Forest Ecology and
Management 169(2002): 3–14.
ecosystems and society, such as land-use changes, which can Alig R, Latta G, Adams D, and McCarl B (2010) Mitigating greenhouse gases: The
affect outcomes both spatially and temporally in unknown importance of land base interactions between forests, agriculture, and residential
ways. Furthermore, interactions between adaptation activities development in the face of changes in bioenergy and carbon prices. Forest Policy
and future mitigation are unknown , increasing the uncertainty and Economics 12: 67–75.
Bachelet D, Lenihan J, Drapek R, and Neilson R (2008) VEMAP vs VINCERA: A DGVM
about the amounts of future GHGs that will be emitted into the
sensitivity to differences in climate scenarios. Global and Planetary Change
atmosphere and about how much will be sequestered and 64: 38–48.
when. Haim D, Alig R, Plantinga A, and Sohngen B (2011) Climate change and future land use
Changes in land use involving forest land may be one in the United States: An economic approach. Climate Change Economics 2(1):
adaptation strategy. For example, if climate-change results in 27–51.
Irland LC, Adams D, Alig R, et al. (2001) Assessing socioeconomic impacts of climate
relatively higher agricultural productivity per acre, some acres change on U.S. forests, wood product markets, and forest recreation. BioScience
may be converted from forests to agricultural use. Such changes 51(9): 753–764.
would alter the supply of products to national and interna- Iverson L, Prasad A, Matthews S, and Peters M (2008) Estimating potential habitat for
tional markets, changing the prices of forest products and the 134 Eastern U.S. tree species under six climate scenarios. Forest Ecology and
Management 254: 390–406.
economic well-being of both consumers and producers. Con-
Joyce LA, Blate GM, Littell JS, et al. (2008) National forests. In: CCSP (ed.) Preliminary
sumers, in turn, would shift their patterns of consumption Review of Adaptation Options for Climate-Sensitive Ecosystems and Resources.
between forest and nonforest products. Producers would pp. 3-1 to 13-127, Washington, DC: USEPA.
change both the types of management they practice (planting, Latta G, Temesgan H, Adams D, and Barrett T (2010) Analysis of potential impacts
thinning, and other cultural treatments) and the ages at which of climate change on forests of the United States. Forest Ecology and Management
259(4/5): 720–729.
they harvest trees, depending on the type of owner (private or McCarl B, Adams D, Alig R, Burton D, and Chen C (2000) Effects of global climate
public). Climate change could influence not just the US forest change on the U.S. forest sector: Response functions derived from a dynamic
products sector but forest-based ecosystem services, including resource and market simulator. Climate Research 15: 195–205.
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Sohngen B, Mendelsohn R, and Sedjo R (1999) Forest management conservation White E, Alig R, and Haight R (2010) The forest sector in a climate-changed
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