Cost-effective land-use options of drained peatlands– integrated biophysical-economic modeling approach

Peatlands provide habitats for many species and a variety of ecosystem services worldwide. In this study we used an integrated biophysical-economic modeling approach with multi-objective optimization to investigate how alternative land-use and land-management (LULM) options jointly affect economic returns from marketed (timber, energy peat, restoration costs) and non-marketed public goods (water quality, GHG emissions, biodiversity) in a typical landscape dominated by peatlands in northern Finland. We considered several LULM options including no action (the current state will continue), bioenergy wood harvesting, intensive forest management, restoration, and energy peat extraction with three after use options (no after use, reforestation, rewetting). Our study revealed strong tradeoffs between biodiversity and ecosystem services in drained peatlands. Optimal LULM depended strongly on the chosen objectives, i.e. whether marketed or non-marketed goods were preferred. For example, when the objective was carbon neutral land-use, the no action option was mostly chosen, while bioenergy wood harvesting was mostly chosen when the objective was to provide economic and environmental benefits at the same time. The strong tradeoff between biodiversity and ecosystem services indicates that compromises are unavoidable in order to obtain a multi-functional landscape which provides biodiversity conservation, climate change mitigation and water protection in a cost-effective manner. •Selection of alternative land-management options for peatlands was analyzed.•The cost-impact analysis utilized multi-objective optimization.•The variables were the NPV, biodiversity, climate impact, and water emissions.•A small decrease in the NPV resulted in a clear increase in environmental benefits.•Optimal land-management depended strongly on the chosen objectives.