Is Diversification a Suitable Option to Reduce Drought-Induced Risk of Forest Dieback? An Economic Approach Focused on Carbon Accounting

Extreme or recurrent drought events are the principal source of stress on forests, impairing their overall health. They result in financial losses for forest owners and ecosystem service losses for society. Most of the forested area in the Grand-Est region, France, is covered by European beech, which is projected to decline in the future due to repeated drought events driven by climate change. Diversification is a management option that can reduce the drought-induced risk of dieback. Two types of diversification were separately and jointly analyzed: a mixture of beech species with oak species and a mixture of different tree diameter classes. Two types of losses were also considered: financial and in terms of carbon storage under different occurrences of drought events derived from climate change scenarios. We combined an individual-based model of forest growth with a forest economic approach (i.e., land expectation value or LEV), which we adapted to the stochastic context by developing a doubly-weighted LEV. The maximization of the LEV made it possible to identify the most effective adaptation strategies in terms of timber revenue and carbon storage by means of three different carbon values (i.e., market value, shadow price, and social cost). The results showed that diversification increases timber returns and reduces the loss in timber volume due to the drought-induced risk of forest dieback. However, diversification negatively affects carbon storage. Integrating the value of carbon storage increases the value of the forest stand, but only a high carbon value has a significant economic impact.