Optimal forest species mixture with carbon storage and albedo effect for climate change mitigation

Accounting for carbon storage and the albedo effect through Payments for Ecosystem Services (PES) or mandatory offset permits aims to internalize the environmental externalities of forest management. This can shift the economically optimal rotation age, and incorporate rents for a wider range of ecosystem service offerings. A mixed stand economic optimization model was used to determine the optimal stand mixture and inter-species climate regulation trade-offs. Mixed forest dynamics between deciduous silver birch (Betula pendula Roth.) and coniferous Norway spruce (Picea abies Karst.) were evaluated. The sensitivity of our results to the absolute species-specific differences in albedo parameter values was also conducted. Results indicated that a synergistic climate regulation trade-off between the two species exists. The optimal rotation for the combined carbon storage and albedo effect was equivalent to that of the carbon storage only case. Differences in absolute albedo impacts were most sensitive at high discount rates, for ‘climate only’ management, and over increasing offset prices. These results demonstrate the importance of parameter certainty in the promotion of PES in forestry. They also show that mixed stands can promote more efficient trade-offs between forest ecosystem service offerings and provide a basis for diversifying between ecosystem functions. •Mixed species stands can promote efficient ecosystem service trade-offs.•Accounting for albedo made deciduous species relatively more desirable.•Including albedo with carbon storage benefits did not shorten the optimal rotation.•Albedo parameter uncertainty led to wide variations in the optimal species mixture.