New Study Assesses the Economic Tradeoffs of Carbon-Focused Management

Introduction 

Forests play an important role in storing carbon dioxide in the fight against climate change, and carbon markets work to harness this potential by incentivizing the development of forest carbon programs that enhance the amount of carbon stored within a forest. The potential carbon benefits of these practices are quite high, with one study identifying that enacting climate-smart practices can increase the forest carbon sink strength by 38% in Pennsylvania by 2030, without interrupting timber supply (Papa et al, 2023). While the carbon benefits of these practices have been demonstrated, the question remains whether these projects are financially feasible, especially for family forest owners. A recent study by researchers at Michigan State University, led by Dr. Shivan Gc, helps to answer this question by evaluating the financial tradeoffs of various forest management strategies compared to business as usual.  

Timber harvesting at standard rotation periods was considered the "business as usual" status for forest lands. To compare this with carbon revenues, the study considered multiple types of carbon projects, including afforestation, Improved Forest Management, and Avoided Conversion. The forest management practices associated with these types of projects included extended harvest rotations, restocking forests, reducing deforestation, controlled deer browse, timber stand improvement strategies (prescribed fire and thinning), silvopasture, and no harvest. A portfolio scenario that included a combination of the management practices listed above was also created. 

Results 

The study found that all alternative management scenarios could be considered profitable when using a 5% rate of return; however, in Pennsylvania, some of the alternative management scenarios had higher timber returns, even without carbon incentives. These management strategies include managing for deer browsing, timber stand improvements (such as prescribed burns and thinnings), and reducing unsustainable high-grading. Strategies that did not have higher returns prior to including carbon incentives often included practices with the highest up-front costs, such as afforestation.  

When carbon revenues were included, some alternative management practices were more profitable than business-as-usual scenarios. However, favorable carbon prices depended on the type of strategy employed. For example, extended rotation management strategies became more profitable than business as usual when carbon prices were $70 per ton, and restocking strategies were more profitable at $20 per ton. The portfolio describing a mixed management strategy became more profitable than business as usual when carbon prices reached $15 per ton. This price shows promise, as average carbon prices today are around $13, with many developers offering landowners payments of $18 per acre for IFM projects (Fast Markets, 2026).

This is especially notable since these current averages are higher than the price per ton used in the past ($8.29 per ton). These findings illustrate that carbon pricing is slowly becoming competitive with business-as-usual forest land uses, increasing the accessibility of these solutions to landowners. 

Significance of the Findings

State and Federal agencies have a vested interest in conserving forests and increasing their resilience to future extreme weather-related events. These findings illustrate that actively managed forests with diverse prescriptions produce superior benefits for both climate mitigation and forest productivity.

 The largest barrier to landowners implementing carbon management practices on their forest lands is the high start-up costs. However, state and federal agencies have the opportunity to reduce the barriers of start-up costs through strategic cost-share and grant programs. Agencies could consider management practices that both increase carbon storage, while presenting future economic benefits for landowners. Key strategies in Pennsylvania include managing deer browse and silvopasture*. The portfolio strategy showed the most promise, indicating that programs could consider a design where they incentivize a broad range of management practices, and help to support a wider variety of activities.  Additionally, the diverse management strategies in this portfolio indicate that multiple pathways to climate-smart forestry exist, giving landowners the opportunity to explore which practices best fit their land and management goals.

 For a full description of the methods and results, please refer to the official research paper: Assessing the economic tradeoffs of various forest management activities to enhance carbon sequestration efforts in Pennsylvania and Maryland 

*Silvopasture by addition is key to obtaining the maximum conservation benefits. Silvopsasture by addition refers to going from pasture or crops lands to adding trees as opposed to taking a forest, removing trees, and adding livestock. 

Appendix: Study Design

The study used economic modeling to predict the financial impact of various management strategies. The forest management practices selected reflected those that are common within carbon project designs, due to their ability to enhance the sequestration of carbon within a forest. The practices included- extended harvest rotations, restocking forests, reducing deforestation, controlled deer browse, timber stand improvement strategies (prescribed fire and thinning), silvopasture, no harvest, and a portfolio scenario that combined multiple management practices. The study used average carbon prices, as well as typical stumpage prices to create a revenue comparison. Additionally, the study factored in the cost of these management strategies. 

References

Fastmarkets carbon-main. Fastmarkets. (2026, August 5). 

Gc, S., Papa, C. C., Pokharel, R., & Clay, K. (2026). Assessing the economic tradeoffs of various forest management activities to enhance carbon sequestration efforts in Pennsylvania and Maryland. Forest Policy and Economics, 187, 103776.