Reforestation on abandoned agricultural lands in Russia – business prospects and climatic effect

Abstract

ABSTRACT In this study, a real plot of abandoned agricultural land overgrown with forest in Russia has been surveyed. The amount of future CO2 sequestration by this forest for the next 20 years has been calculated by means of a mathematical model. The unprofitability of the 20-years climatic reforestation project on this land has been proved, based on the current price of carbon units in Russia and China, because Russia cannot enter the European carbon units’ market. To improve profitability, it was proposed to combine the reforestation with timber harvesting, charcoal, natural fertilisers and forage production. Thus, the wood cut for maintenance is used partially for sale, partially for production of charcoal and partially left as a fertiliser on the cleared stripes, where meadow plants will be replaced with alfalfa, using technologies of zero soil treatment. The economic feasibility study has been performed based on the real capital and current expenses of the combined reforestation project. The positive Net Present Value and a very high Internal Rate of Return of the joint project, calculated by the methods of financial mathematics have indicated its economic viability and attractiveness for investors.