Carbon versus Timber Economy in Mediterranean Forests

: Forests produce goods and services, but the forest economy is based on goods, with market price, more than on services. Under Mediterranean climate conditions forests have low timber production, being frequently ﬁnancially loss-making, despite the environmental services provided, such as carbon sequestration. Timber production and carbon sequestration are compatible, and a proper valuation of both can allow for a more balanced management. The aim of this paper is to assess ﬁnancially a scenario based on maximizing carbon sequestration versus another based on maximizing timber harvesting in a Mediterranean forest. To do that, timber stock, growth and harvesting, and carbon sequestration have been calculated. Applying market prices for timber and CO 2 both scenarios have been assessed, carrying out a sensitivity analysis. Maximising carbon sequestration was more proﬁtable in the vast majority of combinations; timber harvesting was only more proﬁtable if CO 2 prices fell below 30% and timber price increases more than 20%; timber price rise is possible, but a collapse in CO 2 price is not probable. The real barrier is that while timber is as a commodity with market price, carbon sequestration is not. The challenge for the future is to pay for carbon sequestration, mobilising resources from polluting sectors to forests.


Introduction
Forests produce goods, such as timber, firewood, fruits or mushrooms, and services, such as landscape, biodiversity, water or soil protection, carbon sequestration or recreation [1][2][3][4]. However, the forest economy is frequently based on the production of goods, with a market value, and does not usually consider services [5]. In addition, even benefits from forest products have declined over the last decades [6]. As a result, forests with low timber productivity often operate at a financial loss, despite the important environmental services provided. Landowners often lose money, and these negative financial results discourage forestry [7].
The Mediterranean climate is characterized by a cold winter period and a warm and dry summer. This seasonality gives rise to two short growing seasons, in spring and autumn, separated by two interruptions, due to cold in winter and drought in summer [8]. This short growing seasons limits vegetation growth. As a consequence, timber production under Mediterranean climate is low, unlike, for example, Atlantic, Central European or Scandinavian forests. This does not mean that Mediterranean forests lack value, as they host, for example, a high number of rare and locally endemic taxa [9].
Ecosystem services may be complementary or opposed; for example, recreational use and wildlife conservation may conflict. Similarly, timber extraction and carbon sequestration may conflict with each other. For example, the rotation length varies according to whether the aim is to maximise timber production or carbon sequestration, being longer in the second scenario [10][11][12].
Timber is a renewable resource that allows carbon to be stored, so increasing its use, especially in construction, is highly desirable from an environmental point of view [13], This study considered the two main tree species, Pinus sylvestris and P. pinaster, which accounted for 91% of the forest timber stock [24]. The two species generally form pure stands, the former dominating in the higher zones, between 1300 and 1760 m, and the latter in the lower zones, between 950 and 1300 m; only occasionally are both species mixed, in contact areas.
The study period was 1999 to 2020 for the historical analysis of forest fires, and 2005 to 2024 for the analysis of timber harvesting and carbon sequestration.
The forested area of Madrid accounts for 264,658 ha, 82.4% dense forests and 17.6% agroforestry systems, with sparse trees. Dense forests are dominated in 58.4% by hardwoods (mainly Quercus rotundifolia Lam.) and in 41.6% by conifers. Stands dominated by Pinus sylvestris and P. pinaster, with an ecology and management similar to those analysed in this study, account for 44% of conifer stands and 18.6% of total dense forests [25]. Nationally, these two species account for 33% of all conifers and 8% of forests [26].
In terms of timber volume, P. sylvestris and P. pinaster represent 49% of the total timber volume in Madrid, and 34% for the whole of Spain; both species occupy the first place in terms of timber stocks in Spain, with around 153 million m³ [25,26]. The volume of timber harvested in Spain in 2018 [26] was 19.7 million m³, 53.9% of which was conifers and 46.1% hardwoods (overwhelmingly Eucalyptus). The volume of Pinus pinaster was 3,184,441 m³ and that of P. sylvestris was 1,275,061 m³; both species accounted for 22.6% of the total annual of timber harvesting, and 41.9% of conifers total.
The total timber yield of these two species in Spain was 80.2 million € [26]. The total value at basic prices of forestry and logging products in Spain in 2019 was €960.5 million, 0.1% of the national total [27]; timber from these two pines accounted for 8.35% of the value of forestry products.
Consequently, the stands of P. sylvestris and P. pinaster, similar to those analysed in this work, are very representative in Spain, both superficially and in terms of their timber existences and annual harvesting volume. This study considered the two main tree species, Pinus sylvestris and P. pinaster, which accounted for 91% of the forest timber stock [24]. The two species generally form pure stands, the former dominating in the higher zones, between 1300 and 1760 m, and the latter in the lower zones, between 950 and 1300 m; only occasionally are both species mixed, in contact areas.
The study period was 1999 to 2020 for the historical analysis of forest fires, and 2005 to 2024 for the analysis of timber harvesting and carbon sequestration.
The forested area of Madrid accounts for 264,658 ha, 82.4% dense forests and 17.6% agroforestry systems, with sparse trees. Dense forests are dominated in 58.4% by hardwoods (mainly Quercus rotundifolia Lam.) and in 41.6% by conifers. Stands dominated by Pinus sylvestris and P. pinaster, with an ecology and management similar to those analysed in this study, account for 44% of conifer stands and 18.6% of total dense forests [25]. Nationally, these two species account for 33% of all conifers and 8% of forests [26].
In terms of timber volume, P. sylvestris and P. pinaster represent 49% of the total timber volume in Madrid, and 34% for the whole of Spain; both species occupy the first place in terms of timber stocks in Spain, with around 153 million m 3 [25,26]. The volume of timber harvested in Spain in 2018 [26] was 19.7 million m 3 , 53.9% of which was conifers and 46.1% hardwoods (overwhelmingly Eucalyptus). The volume of Pinus pinaster was 3,184,441 m 3 and that of P. sylvestris was 1,275,061 m 3 ; both species accounted for 22.6% of the total annual of timber harvesting, and 41.9% of conifers total.
The total timber yield of these two species in Spain was 80.2 million € [26]. The total value at basic prices of forestry and logging products in Spain in 2019 was €960.5 million, 0.1% of the national total [27]; timber from these two pines accounted for 8.35% of the value of forestry products.
Consequently, the stands of P. sylvestris and P. pinaster, similar to those analysed in this work, are very representative in Spain, both superficially and in terms of their timber existences and annual harvesting volume.

Studied Scenarios
Two scenarios have been analysed: • Scenario A. Current situation. The forest has conservation objectives, without commercial harvesting (only for forest maintenance); economic return is secondary. Timber extraction is scarce, but carbon sequestration is maximised. • Scenario B. Maximum sustainable timber production. The objective would be to maximize timber harvesting, in a sustainable form, with guarantees of forest preservation. Timber extraction would be maximised, but carbon sequestration would be reduced.
In both cases it is intended to obtain the cost-effectiveness of the model, in order to determine differences. In order to make the calculations comparable with those of other regions, we have always used relative values per hectare, considering the forested area.

Timber Stock, Growth and Harvesting
Forest inventories carried out in 2005 and 2014 [24,28] calculated timber volume (commercial fraction). In the two scenarios studied there was forest growth and harvesting, associated with management or timber production. Net timber volume growth (G TV ), in m 3 /ha, is timber volume growth (I TV ) minus timber volume harvesting (H TV ). Annual timber volume increase (I TV ) was calculated using the equations for Pinus pinaster and P. sylvestris established for Madrid region in the National Forest Inventory [29].
In scenario A harvesting between 2005 and 2014 focused on dead trees, especially Pinus pinaster affected by bark beetles. From 2015 to 2024 the management plan [24] established an annual logging calendar, focused on reducing excessive density in some areas, mainly covered by P. sylvestris. In scenario B the maximum possible timber harvesting (H TV ), in m 3 /yr, was calculated using Gehrhardt equation [30], recommended for decades for Pinus sylvestris forests in this region [31], and currently of obligatory use in the Madrid region for irregular forests with stand management [32], as well as in most Spanish regions. In this equation p is the period established (in this case the forest rotation, 120 years) and I TV the annual increase of the volume (m 3 ): H TV (Scenario B) = V T /p + I TV /2 (1)

GHG Sequestration
Forest inventories, growth equations and harvesting use timber volume (m 3 ), but for carbon sequestration calculations it is necessary to use biomass values (Mg). Consequently, whenever a biomass value had to be used, it was obtained by multiplying the timber volume (V T ) in m 3 , by timber density (δ T ) in Mg/m 3 . The average density for Mediterranean conifers is 0.507 Mg/m 3 [33].
Carbon sequestration is the amount of CO 2 removed from the atmosphere by vegetation and fixed in plant tissues. For its calculation it is necessary to determine the net biomass growth of the forest (G NB ), in Mg/ha, not only for the commercial fraction (timber), but for the whole forest biomass. The forest biomass (T B ) in Mg/ha is [34]: where M is the commercial biomass (Mg/ha), B is the non-commercial aerial part (branches and leaves; the aerial part corresponds 79.5% to the stem and 20.5% to leaves and branches in Pinus pinaster, and 71.3% and 28.7% respectively in P. sylvestris [35]. Operating with these values we obtained B P. pinaster = 0.258·M y B P. sylvestris = 0.403·M), U is the underground biomass (roots; the aerial part in Pinus pinaster is 77.9% and the root part 22.1%, and in P. sylvestris 78.6% and 21.4% respectively [35]. Operating we obtained U P. pinaster = 0.357·M y U P. sylvestris = 0.382·M) and PL is the soil litter (Tthe mean value is 13.2 Mg/ha in Pinus pinaster and 48.2 Mg/ha in P. sylvestris [36]). Biomass increase (I B ) due to tree growth affects to the aerial part and the roots (M + B + U), but tree extraction, harvesting (H B ), affects only to the aerial part but not to the roots (M + B). Stumps and roots are not extracted after felling, remaining in the ground, where they decompose slowly, given the large amount of resin they contain. This allows a progressive incorporation of carbon into the soil, and a very slow release into the atmosphere, so for GHG balances its influence can be considered negligible. Therefore, their separate calculation is necessary to obtain the net biomass growth. Net biomass growth (G NB ) is biomass increase (I B ) minus biomass extraction (H B ): Sequestration (SQ), in Mg CO 2 eq /ha·yr, is the net biomass growth (G NB ) multiplied by the percentage of carbon (C % ) and the equivalence factor between CO 2 and C (3.67). Carbon percentage in P. pinaster is 51.1% in P. sylvestris 50.9% [35]. Consequently:

GHG Emissions from Forest Fires
To obtain GHG emissions from forest fires we used IPCC equation [37]: where L FT , total emission of GHGs by forest fires (Mg CO 2 eq ), including CO 2 , CH 4 and N 2 O. A, burnt area (ha), estimated as an average of historical forest fire data. Between 1999 and 2020 there was one major fire (1999), 15 years without fires and 6 years with small fires (Table 1), the average annual burnt area was 5015 ± 4959 ha. MB, mass of fuel available for combustion (Mg/ha), including the aerial part and the soil litter, but not the roots, so MB = M + B + PL. We considered the average forest timber volume (V A ), and weighted according to the area of each of the species: where C f is 0.48 (dimensionless) and G ef 1.577.50 g CO 2 eq /kg [38]. We have worked with average values per hectare, so the total annual emission from forest fires (L FT ) is divided by the forested area, obtaining the average emission (L FA ).

Financial Assessment of Scenarios
The average timber price in Spain according to the latest published forestry statistics (2018) was 16.49 €/m 3 for P. pinaster and 21.03 €/m 3 for P. sylvestris. However, in the public forests of Madrid the average price was lower, 5.79 €/m 3 between 2008 and 2012 [25], well below the market value. This low value is due to the fact that logging is not focused on production, but on the maintenance of the stand, and consequently the extracted timber is irregular in production, size and quality. This is the case in scenario 1, where a timber price 50% of the average market price is currently being applied. For the financial valuation of CO 2 sequestration, the average price of Emission Rights in the European Union in 2020 (24.75 €/Mg CO 2 ) has been used.

Financial Assessment of Scenarios
The average timber price in Spain according to the latest published forestry statistics (2018) was 16.49 €/m³ for P. pinaster and 21.03 €/m³ for P. sylvestris. However, in the public forests of Madrid the average price was lower, 5.79 €/m³ between 2008 and 2012 [25], well below the market value. This low value is due to the fact that logging is not focused on production, but on the maintenance of the stand, and consequently the extracted timber is irregular in production, size and quality. This is the case in scenario 1, where a timber price 50% of the average market price is currently being applied. For the financial valuation of CO2 sequestration, the average price of Emission Rights in the European Union in 2020 (24.75 €/Mg CO2) has been used. Figure 2 summarises the results of growth, timber harvesting and stock for the two analysed scenarios. In scenario A the average growth was 3.64 ± 0.06 m³/ha·y, average harvesting 1.04 ± 0.20 m³/ha·y and average stock 156.96 ± 3.75 m³/ha, and in scenario B 3.17 ± 0.01 m³/ha·y, 2.73 ± 0.10 m³/ha·y and 137.07 ± 0.59 m³/ha, respectively.  Figure 3 summarises GHG sequestration for the two analysed scenarios. In scenario A, average sequestration was 4.60 ± 0.31 Mg CO2 eq/ha·y, and in scenario B 1.69 ± 0.01 Mg CO2 eq/ha·y.

GHG Emissions from Forest Fires
In scenario A the average timber volume (VA) was 156.96 m³/ha, resulting in an annual GHG emission from forest fires (LFT) of 522.16 Mg CO2 eq/y and a relative emission (LFA) for the forested area of 0.80 Mg CO2 eq/ha·y; in scenario B the value of VA was 137.07 m³/ha, LFT 471.10 Mg CO2 eq/y and LFA 0.72 Mg CO2 eq/ha·y.  Figure 3 summarises GHG sequestration for the two analysed scenarios. In scenario A, average sequestration was 4.60 ± 0.31 Mg CO 2 eq /ha·y, and in scenario B 1.69 ± 0.01 Mg CO 2 eq /ha·y.

GHG Emissions from Forest Fires
In scenario A the average timber volume (V A ) was 156.96 m 3 /ha, resulting in an annual GHG emission from forest fires (L FT ) of 522.16 Mg CO 2 eq /y and a relative emission (L FA ) for the forested area of 0.80 Mg CO 2 eq /ha·y; in scenario B the value of V A was 137.07 m 3 /ha, L FT 471.10 Mg CO 2 eq /y and L FA 0.72 Mg CO 2 eq /ha·y.

GHG Balance
The net GHG balance, as indicated above, is the sequestration minus the emission from forest fires. For scenario A the average value was 3.80 Mg CO 2 eq /ha·y., and in scenario B 0.97 Mg CO 2 eq /ha·y.

GHG Balance
The net GHG balance, as indicated above, is the sequestration minus the emission from forest fires. For scenario A the average value was 3.80 Mg CO2 eq/ha·y., and in scenario B 0.97 Mg CO2 eq/ha·y.

Financial Assessment of Scenarios
To assess the two scenarios considered, five possible prices for both timber and CO2 have been considered: an average price (justified above); two low prices, 20 and 30% below the average; and two high prices, 20 and 30% above the average ( Table 2). With these prices, a sensitivity analysis has been conducted for both scenarios, considering all possible price combinations (Table 3). Sensitivity analysis is a financial model that determines how target variables (in this study global income) are affected based on changes in other variables known as input variables (in this case timber and CO2 income).

Financial Assessment of Scenarios
To assess the two scenarios considered, five possible prices for both timber and CO 2 have been considered: an average price (justified above); two low prices, 20 and 30% below the average; and two high prices, 20 and 30% above the average ( Table 2). With these prices, a sensitivity analysis has been conducted for both scenarios, considering all possible price combinations (Table 3). Sensitivity analysis is a financial model that determines how target variables (in this study global income) are affected based on changes in other variables known as input variables (in this case timber and CO 2 income).
Analysing the 25 possible price combinations, carbon sequestration (scenario A) is more profitable in 92% of the cases (23 combinations), and timber production (scenario b) in 8% (2 combinations). The combinations that make timber production more profitable involve a CO 2 price 30% below average and a timber price 20-30% above average. However, the probability of occurrence of each combination is different. For example, it seems more likely that the price of timber and CO 2 will remain stable or increase than decrease, so options that combine stable prices or price increase scenarios would be more likely to occur than those with price decrease, but given the uncertainty it is not possible to establish their probability.

Discussion
Forest growth was calculated using the equations established for the Madrid region by the National Forestry Inventory [29]. Using two independent timber stock calculations from 2005 and 2014 [24,28], and quantifying timber removals in that period, it has been verified the adjustment of these equations to the studied forest with a 98.2% accuracy. Consequently, the calculated forest growth between 2005 and 2014 has been verified, and is in according to what is expected for the study region. Scenario A represents a typical practice in protective forests in Mediterranean Spain, with low timber extraction. Scenario B represents the maximum sustainable timber harvest, which could not be exceeded without forest decline. These are, therefore, reasonable scenarios.
Current timber production in the forest (scenario A) is marginal, limited to logging for forest maintenance. In addition, the price of timber is low, as production is irregular and of poor quality, as noted above. As a result, an average income of 9.73 €/ha·y is barely reached, and potential price fluctuations do not have much effect (6.81-12.65 €/ha·y). The maximum sustainable timber production would yield on average 51.44 €/ha·y, with a range depending on price fluctuations of 36.01-66.87 €/ha·y.
Considering the volume of timber harvested in 2018 in Spain, the area occupied by P. pinaster and P. sylvestris, and the average timber prices for these species [26], national average production of P. pinaster was 3.01 m 3 /ha·y with a yield of 49.63 €/ha·y and that of P. sylvestris was 1.24 m 3 /ha·y with a yield of 26.08 €/ha·y. In P. pinaster the production and yield were higher due to the existence of very productive stands in the north of Spain, in rainier areas; the value in P. sylvestris was more representative for pine forests similar to those studied. However, as noted above, timber prices in public forests of Madrid were below market values, and consequently below these yields.
For P. sylvestris, a more stable reference for the forests studied, the average yield was higher than that currently obtained in this forest (scenario A), although it is almost half the value that could be obtained by dedicating the forest to timber production (scenario B). These results are therefore consistent with national values.
The CO 2 sequestration rate for Spanish pine forests reported in the literature ranges from 3.66 Mg CO 2 eq /ha·y [35] to 5.10 Mg CO 2 eq /ha·y [39]. Our results were 3.80 Mg CO 2 eq /ha·y in scenario A, consistent with these values; in scenario B, timber extraction greatly reduces the sequestration rate to 0.97 Mg CO 2 eq /ha·y. Based on the price of emission rights in the EU, as noted above, an average sequestration value of 94.05 €/ha·y in scenario A and 24.01 €/ha·y in scenario B was obtained. Values reported in the literature for carbon sequestration in Southern Europe vary widely, ranging from 9 €/ha·y [40] to 895 €/ha·y [41]. In boreal forest it has been estimated that a 5% reduction in timber harvest revenues can produce a 15-23% increase in carbon sequestration [42].
It is important considering the incidence of forest fires in the sequestration rate, as it implies a loss of sequestration and a release of GHGs; in scenario A, for example, the sequestration rate without considering forest fires would be 4.60 Mg CO 2 eq/ha-y, dropping to 3.80 Mg CO 2 eq/ha-y if fire risk is taken into account. Although between 2007 and 2015, fire-related emissions in Spain decreased by 53% compared to 1998-2006 [38], predictions point to a fire risk increase in the Mediterranean as a consequence of climate change [43,44], so it is reasonable to incorporate this variable into the calculations. As noted above, in both scenarios, preventive fire prevention forestry is applied, removing dead fuel. In addition, the region has ample fire-fighting means, so there is no significant variation in fire risk between the two scenarios. More influential is the meteorology of each year, especially the distribution of rainfall in late spring, summer and early autumn, which determine the length of the high fire-risk period. Negligence and criminal acts are also important. It has therefore been chosen to use historical risk as an indicator, which already incorporates these uncertainties.
Calculations were based on reliable data and realistic assumptions. The sensitivity analysis demonstrated that forest protection, maximising carbon sequestration, was more profitable in 92% of price combinations. Timber harvesting was only more profitable if CO 2 prices fell below 30% of their current value coupled with an increase in timber prices greater than 20%. A sharp rise in timber price cannot be ruled out, but it is unlikely to be associated with a collapse in the price of CO 2 , as concern about climate change is growing, and GHG emission reduction targets are intense and pressing, so everything points to a future increase in the price of emission rights, rather than a collapse.
Consequently, dedicating Mediterranean forests to carbon sequestration, without timber harvesting, is an economically viable and environmentally interesting option, due to its beneficial effects on climate change mitigation. However, valuing carbon sequestration does not mean abandoning timber harvesting. Both timber production and carbon sequestration are compatible forest environmental services, and maximising both at the same time is a win-win strategy [22]. A proper valuation of both, and not only of timber, can allow for a more balanced forest management, acting in each forest in a differentiated way according to its environmental potential and value.
The real barrier at present is that while timber is as a commodity with a market price, carbon sequestration is not. There is a valuation of the tonne of CO 2 , but it is not a real market good, being associated with emission trading in regulated sectors (in the European Union the Emissions Trading System). Consequently, those who emit GHGs into the atmosphere must pay for it (at least in regulated sectors), but those who sequester carbon, such as forests, are not remunerated for it. The result is that forests, essential carbon sinks for mitigating climate change, are, at least in much of the Mediterranean region, financially loss-making and even a burden for their owners.

Conclusions
Carbon sequestration and timber extraction in properly managed forests are sustainable activities which may be compatible. An appropriate forest management ensures the persistence of the forest and avoids risks of damage biodiversity. Moreover, as management is based on reliable and objective information, it is possible to translate the carbon sequestration achieved into potentially tradable carbon credits [45].
The lack of adequate accounting and valuation of carbon sequestration, as happens with many other ecosystem services, leads to a forest economy based on timber, which in areas with a Mediterranean climate produce usually negative financial results due to the low timber productivity. It would be better to consider and value all these ecosystem services, but just by adequately valuing carbon sequestration the financial balance of the forests changes radically; timber production ceases to be a necessity and becomes just another option, together with carbon sequestration.
The challenge for the future is to make carbon sequestration a market good and not a free environmental service, and thus mobilise resources from polluting sectors (polluterpays principle) to forests, which would lead to greater financial sustainability of the forest sector, and to an added improvement of the landscape, biodiversity and rural employment. Data Availability Statement: Data will be available upon request.

Conflicts of Interest:
The author declares no conflict of interest.