Which Is more Important, Carbon or Albedo? Optimizing Harvest Rotations for Timber and Climate Benefits in a Changing Climate

Boreal coniferous forests decrease climate forcing by sequestering carbon from the atmosphere. However, they also increase climate forcing through their effect on surface albedo, as coniferous forests make Earth's surface darker. Ignoring the warming effect of albedo can lead to a flawed climate policy that overstates the benefits of forest carbon sequestration. In this paper, we examine how these climate externalities affect the socially optimal harvest rotations and the social land value of a forest stand that is managed for timber, carbon, and albedo under changing economic and ecological conditions. We also examine how the relative importance of these externalities changes over time. We show that the rotations and the land value are sensitive to the changing external conditions, especially in the long run. Hence, for policy‐ relevance, stand‐level analyses with long examination horizons should account for these changes. In general, the carbon externality increases land value and lengthens rotations, whereas the albedo externality decreases land value and shortens rotations. At our study site in Finland, the positive effect of carbon on land value is stronger than the negative effect of albedo. The opposite effects of the two externalities on the timing of harvests are currently of equal strength, which means that they cancel out. More generally, inferences regarding the impacts of the externalities vary depending on climatic conditions, the incidence of solar irradiance, and the shadow prices of carbon and albedo. We discuss the extrapolation of our results throughout the boreal region based on variation in these factors.