Effects of precommercial thinning on the forest value chain in northwestern New Brunswick: Part 6 – Estimating the economic benefits

Abstract

The Green River precommercial thinning (PCT) trials were established between 1959 and 1961 in naturally regenerating balsam fir (Abies balsamea [L.] Mill.)-dominated stands an average of eight years after overstory removal. Following clearcut harvest of three of the study's six replicates in the fall of 2008, the rotation-length effects of PCT and vegetation management (VM; deciduous tree and brush suppression) on the forest value chain were integrated into a spreadsheet-based model that estimates the net present value (NPV) of these silvicultural treatments. Assuming costs and prices near recent values, both PCT and VM were observed to support positive landowner NPVs through discount rates in excess of 6%. At a discount rate of 4% and an age where sawlog production was maximized, PCT and VM offered similar NPV (>$550/ha). Landowners that can attract buyers willing to pay a premium for wood from thinned stands (equal to the sum of reduced operational overhead charges, harvesting and sawmilling costs and increased pulping costs) could see the value of their stands double. Sensitivity analyses revealed that these results are dependent on site productivity, silvicultural costs and a strong premium on sawlog stumpage rates. Depending on economic circumstances, PCT and VM could be attractive investments on high quality sites that are situated in close proximity to wood processing infrastructure.