Economy of birch management AA - uni-freiburg.de · High quality silver birch management in...

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METSÄNTUTKIMUSLAITOS SKOGSFORSKNINGSINSTITUTET FINNISH FOREST RESEARCH INSTITUTE www,metla,fi Economy of high quality birch management (Anssi Ahtikoski) Contents of the presentation Two different cases and locations on silver birch management in Finland – does better quality pay off ? curly birch management, economic aspects

Transcript of Economy of birch management AA - uni-freiburg.de · High quality silver birch management in...

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METSÄNTUTKIMUSLAITOSSKOGSFORSKNINGSINSTITUTETFINNISH FOREST RESEARCH INSTITUTEwww,metla,fi

Economy of high quality birch management (Anssi Ahtikoski)

Contents of the presentation

•Two different cases and locations on silver birch management in Finland –does better quality pay off ?

•curly birch management, economic aspects

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METSÄNTUTKIMUSLAITOSSKOGSFORSKNINGSINSTITUTETFINNISH FOREST RESEARCH INSTITUTEwww,metla,fi

Locations of the birch stands

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METSÄNTUTKIMUSLAITOSSKOGSFORSKNINGSINSTITUTETFINNISH FOREST RESEARCH INSTITUTEwww,metla,fi

High quality silver birch management in south-central Finland

Management schedules, in brief

Planting with 1500 seedlings, no tending of seedling stand, two or three intermediate thinnings, final cut

•Planting with 2500 seedlings, tending of seedling stand, two or three intermediate thinnings, final cut

•Two locations: Lahti and Kuopio

with and

without pruning

QUESTIONS:

1) two or three thinnings ?

2) 1500 or 2500 seedlings ?

3) South or Central Finland ?

4) what is the return of investment (ROI) on pruning ?

all analyses on high productive site type (dominant height100= 30-33m)

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METSÄNTUTKIMUSLAITOSSKOGSFORSKNINGSINSTITUTETFINNISH FOREST RESEARCH INSTITUTEwww,metla,fi

Applied stumpage prices and the costs

of silvicultural works

378pruning (350 stems/ha)

306tending of seedling stand

594planting

260mounding

135clearing of regeneration area

unit price, €/hasilvicultural work

pulpwood 13.14 €/m3

birch sawlogs43.21 €/m3

..if pruned then 25% of total sawlogs volume in final cuta) is worth 120 €/m3

(65% of normal quality, 10% directed to pulpwood)

a)Kannisto & Herajärvi 2006

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METSÄNTUTKIMUSLAITOSSKOGSFORSKNINGSINSTITUTETFINNISH FOREST RESEARCH INSTITUTEwww,metla,fi

Growth predictions... by MOTTI stand simulator

What is MOTTI?

A stand-level analysis tool for assessing the effects of alternative forest management on the

development of stand and treesincomes and costs profitability of forest management

Workbench for modellersmodel building and testing

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METSÄNTUTKIMUSLAITOSSKOGSFORSKNINGSINSTITUTETFINNISH FOREST RESEARCH INSTITUTEwww,metla,fi

System overview / MOTTI

Growth & Mortality

Stand-levelTree-level

Basal area

growth

Height growth

Mortality

Self-thinning

Tree k

Tree k+1

Tree k

Tree k+1

Tree-dataUpdate

Stand-data

Calculate

Site-index

Predict(in the 1st

round)

Estimate

Update

Optional

Update

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METSÄNTUTKIMUSLAITOSSKOGSFORSKNINGSINSTITUTETFINNISH FOREST RESEARCH INSTITUTEwww,metla,fi

Simulation of stand development in MOTTI

Stand data base at time i

Prediction of site indexCompetition measures

Calculation of the supplementary information

Tree crown ratio

Mortality-individual-tree mortality-self-thinning on stand level

Tree growth-tree basal area-tree height

Prediction of stand dynamicsDominant height

increment

Updating of tree and stand characteristics

Auxiliary models-stem volume-branchiness-stem quality

Tree variables-diameter-height

Stand characteristics-stem number-basal area-dominant height-volume

Updated stand data base at time i + 5 i=i+5

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METSÄNTUTKIMUSLAITOSSKOGSFORSKNINGSINSTITUTETFINNISH FOREST RESEARCH INSTITUTEwww,metla,fi

Planting with 1500 seedlings, no tending of seedling stand, three thinnings, final cut = traditional management

thinnings at biological age of

20 years (pulpwood 34 m3/ha)

35 years (sawlogs 11.0, pulpwood 45.5)

50 years (sawlogs 26.1, pulpwood 34.5)

final cut at age 60:

sawlogs 152.3

pulpwood 104.5 m3/ha

QUESTION 1: Two or three thinnings ?

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METSÄNTUTKIMUSLAITOSSKOGSFORSKNINGSINSTITUTETFINNISH FOREST RESEARCH INSTITUTEwww,metla,fi

Planting with 1500 seedlings, no tending of seedling stand, two thinnings, final cut = present management

thinnings at biological age of

24 years (pulpwood 55.4 m3/ha)

46 years (sawlogs 34.6, pulpwood 77.9)

final cut at age 60:

sawlogs 145.6

pulpwood 94.6 m3/ha

QUESTION 1: Two or three thinnings ?

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METSÄNTUTKIMUSLAITOSSKOGSFORSKNINGSINSTITUTETFINNISH FOREST RESEARCH INSTITUTEwww,metla,fi

QUESTION 1: Two or three thinnings ?

-500

0

500

1000

1500

2000

2500

3000

3500

4000

2 % 3 % 4 % 5 %

three thinninngs, no pruning

three thinnings & pruning

two thinnings, no pruning

two thinnings & pruning

two thinnings +pruning+small-sizedsawlogs

"what if" we fail in pruning

interpreparation:

the risk for pruning is 417 €/ha

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METSÄNTUTKIMUSLAITOSSKOGSFORSKNINGSINSTITUTETFINNISH FOREST RESEARCH INSTITUTEwww,metla,fi

QUESTION 2: 1500 or 2500 seedlings ?

when 2500 seedlings planted,

tending of seedling stand required at

biological age of 7 years

thinnings at biological age of

20 years (pulpwood 34 m3/ha)

35 years (sawlogs 11.0, pulpwood 45.5)

50 years (sawlogs 26.1, pulpwood 34.5)

when 1500 seedlings planted,

we do not need tending of seedling stand

thinnings at biological age of

22 years (pulpwood 31.3 m3/ha)

37 years (sawlogs 12.4, pulpwood 43.8)

50 years (sawlogs 29.5, pulpwood 38.8)

final cut at age 60:

sawlogs 159.7

pulpwood 103.8 m3/ha

final cut at age 60:

sawlogs 152.3

pulpwood 104.5 m3/ha

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METSÄNTUTKIMUSLAITOSSKOGSFORSKNINGSINSTITUTETFINNISH FOREST RESEARCH INSTITUTEwww,metla,fi

QUESTION 2: 1500 or 2500 seedlings ?

-500

0

500

1000

1500

2000

2500

3000

3500di

scou

nted

net

rev

enue

s, €

/ha

2 % 3 % 4 % 5 %

discount rate

1500 seedlings + pruning but NO tending

2500 seedlings+tending of seedling stand+pruningConclusion: the higher

the discount rate, the

better choice planting with 1500

seedlings would be

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METSÄNTUTKIMUSLAITOSSKOGSFORSKNINGSINSTITUTETFINNISH FOREST RESEARCH INSTITUTEwww,metla,fi

QUESTION 3: South or Central Finland ?

South Finland (Lahti) Central Finland (Kuopio)

thinnings at biological age of

24 years (pulpwood 55.4 m3/ha)

46 years (sawlogs 34.6, pulpwood 77.9)

final cut at age 60:

sawlogs 145.6

pulpwood 94.6 m3/ha

thinnings at biological age of

28 years (pulpwood 42.2 m3/ha)

43 years (sawlogs 13.3, pulpwood 44.4)

final cut at age 60:

sawlogs 134.4

pulpwood 101.8 m3/ha

Measured vs. predicted (MOTTI)

N=3700 N= 4500 stems/ha

G=2.72 G= 3.8 m2/ha

D=4.22 D=4.65 cm

Hdom=7.52 Hdom= 7.3 m

11 yrs

measured stand in Suonenjoki, predicted stand in Kuopio, distance app. 40 km

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METSÄNTUTKIMUSLAITOSSKOGSFORSKNINGSINSTITUTETFINNISH FOREST RESEARCH INSTITUTEwww,metla,fi

QUESTION 3: South or Central Finland ?

-500

0

500

1000

1500

2000

2500

3000

3500

2 % 3 % 4 % 5 %

South Finland, no pruningCentral Finland, no pruningSouth Finland, with pruningCentral Finland, with pruning

+36 % better

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METSÄNTUTKIMUSLAITOSSKOGSFORSKNINGSINSTITUTETFINNISH FOREST RESEARCH INSTITUTEwww,metla,fi

QUESTION 4: return on investment (ROI) on pruning ?

pruning at age 16 (Dw 8.2cm)

0

1

2

3

4

5

6

7

RO

I, pe

r ce

nt (%

)

"25%-65%-10%" 40%-50%-10%" "what if 200€/ qualitysawlogs

South FinlandCentral Finland

high productive site, dominant height100= 30-33m

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METSÄNTUTKIMUSLAITOSSKOGSFORSKNINGSINSTITUTETFINNISH FOREST RESEARCH INSTITUTEwww,metla,fi

…What about curly birch (Betula pendula var. carelica) – is curly birch management financially attractive ?

Concise background

•The most valuable and highest-yielding tree species in Finland

•actually a special variant, ”curled silver birch”, in which the lengthwise cells running parallel to the trunk have taken on winding direction

•2/3 naturally grown, 1/3 cultivated, and during the past 20 years app. 5 000 hectares of curly-birch cultivation areas have been established

•end-use: historically in vernacular tools and implements (due to tough and non-splitting structure) , at present corporate gifts (e.g. briefcase), furniture (chairs, tables); the most famous Finnish artists (Akseli Gallen-Gallela, Alvar Aalto, Tapio Wirkkala) have made works of art with curly birch

•requires intensive management and considerable investments in establishment (compared to other tree species in Finland)

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METSÄNTUTKIMUSLAITOSSKOGSFORSKNINGSINSTITUTETFINNISH FOREST RESEARCH INSTITUTEwww,metla,fi

curly birch management as business ?

An example of management schedule

•Planting with cloned plants (i.e. vegetatively propagated plants grown in nursery) and standard seedlings

•Planting intensity: 800 cloned plants and 800 seedlings, total of 1600 plants/hectare

•Very intensive early management with e.g. weeding, several herbicides, plant covers, prunings and special cleanings

•Three intermediate thinnings (ages: 16, 26 and 36 yrs), final cut at age of 50 yrs

Source: Jylhä & Hagqvist, a manuscript on the profitability of curly birch management

all analyses on high productive site type (dominant height100= 30-33m)

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METSÄNTUTKIMUSLAITOSSKOGSFORSKNINGSINSTITUTETFINNISH FOREST RESEARCH INSTITUTEwww,metla,fi

clearing of planting + adjustment of pruning special cleaning pruning pruning thinning pruning thinning pruning thinning final cut

regeneration area+ seedling covers seedling covers of secundary species

2* herbicides

135 €/ha + 1250 + 100 300 300 300 300 300 300

2* 120 €/ha 600

year 0 1 2,3,4 5 7 8 12 20 31

age 16: 1 000 kg of quality

B curly birch (”oksavisa”)

age 26: 6 800 kg of quality

B curly birch (”oksavisa”)

age 36: 6 300 kg of quality

B curly birch (”oksavisa”)

AND 6300 kg of quality A curly birch

(”sorvivisa”)

unit prices

quality B: 1 €/kg

quality A: 4 €/kg

age 50: 48 300 kg of

quality B curly birch

(”oksavisa”)

AND 13 800 kg of

quality A curly

birch (”sorvivisa”)

Source: Jylhä & Hagqvist, a manuscript on the profitability of curly birch management

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METSÄNTUTKIMUSLAITOSSKOGSFORSKNINGSINSTITUTETFINNISH FOREST RESEARCH INSTITUTEwww,metla,fi

Financial assessment on curly birch management

Net present values (incl. bare land value, 1500 €/ha)

0

2000

4000

6000

8000

10000

12000

net p

rese

nt v

alue

, €/h

a

5 % 6 % 7 % 8 %discount rate

IRR= 8.

3% - 9.3

% !

IRR=internal rate of return

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METSÄNTUTKIMUSLAITOSSKOGSFORSKNINGSINSTITUTETFINNISH FOREST RESEARCH INSTITUTEwww,metla,fi

Which one – silver birch or curly birch ?

silver birch

low establishment costs

(< 1000 €/ha)

easy management

robust growth predictions

large variations in stumpage prices

uncertain demand, particularly on pulpwood

average ROIs are low

curly birch

very high establishment costs

(> 5000 €/ha)

intensive and detailed managementrobust price expectations on high quality curly birch

ROIs on management are the highest among the tree species cultivated in Finland !

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METSÄNTUTKIMUSLAITOSSKOGSFORSKNINGSINSTITUTETFINNISH FOREST RESEARCH INSTITUTEwww,metla,fi

Implications ?

..If You are a risk averter and You only expect moderate returns on investment then silver birch,

for risk-takers and investers who desire high-yielding rates choose curly birch ☺