The potential of mixing timber assets to financially offset negative effects of deer browsing on western redcedar

Abstract

Western redcedar (WRC) is a highly desirable species in British Columbia's Coastal Western Hemlock zone, both from a management and a conservation perspective. However, it is also highly palatable for ungulates. Existing countermeasures against browsing all have high costs and imperfect results in common. We used the portfolio method to display how diversification can help to lower investment risk. Using risk-return ratios of a WRC and Douglas-fir (DF), we derived species portfolios that yield maximum financial return per unit of risk. Financial indicators were calculated based on Monte Carlo simulations, which consider timber price fluctuation and browsing risk. Results show how economic risks of a forest investment could be reduced by creating a species portfolio. The optimum portfolio leading to most beneficial risk-return combination is 75% WRC and 25% DF if browsing is lowered using protective measures that double planting costs; and 30% WRC and 70% DF if no protective measures are applied. Accordingly, the most desirable risk-return combination is that of a mixed-species forest, whereas the 2 species don't have to be grown in intimate mixtures. Our research sketches a path forward that can help to ensure WRC will remain an important asset in BC's timber portfolio.