Forestry An International Journal of Forest Research

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1 Forestry An International Journal of Forest Research Forestry, Vol. 84, No. 2, doi: /forestry/cpr003 Advance Access publication date: 9 March 2011 Impacts of thinning and fertilization on timber and energy wood production in Norway spruce and Scots pine: scenario analyses based on ecosystem model simulations JOHANNA ROUTA 1 *, SEPPO KELLOMÄKI 2, HELI PELTOLA 2 and ANTTI ASIKAINEN 1 1 Finnish Forest Research Institute, Eastern Finland Regional Unit, PO Box 68, FI Joensuu, Finland 2 School of Forest Sciences, University of Eastern Finland, PO Box 111, FI Joensuu, Finland *Corresponding author. johanna.routa@metla.fi Summary Based on model simulations, we studied the sensitivity of the production of energy biomass and timber to varying precommercial stand densities. Additionally, we studied their sensitivity to varying thinning regimes alone or combined with nitrogen fertilization. The net present value (NPV) was used to identify the cost-efficiency of management regimes. The simulations were done for Norway spruce grown on fertile (OMT) and medium fertile (MT) sites and Scots pine grown on medium fertile and poor (VT) sites in Finland. For Norway spruce, the modelled stem wood production was the highest when the pre-commercial stand was very dense and late energy wood thinning was modelled together with fertilization. For Scots pine grown on the MT site, the response was similar to Norway spruce. However, on the VT site, the modelled stem wood production was the highest, when the pre-commercial stand was moderately dense and early energy wood thinning was modelled with fertilization. NPV was the highest when the pre-commercial stand was very dense, providing early income. However, energy wood price of 3 11 m 3 would be needed to make the integration of timber and energy wood production more profitable than that aiming for timber production alone without any subsidies. Introduction The Council of Europe has accepted the proposal from the European Commission that European Union member states should produce 20 per cent of their energy from renewable sources, including bioenergy by Each member states has their own target, which means that Finland should produce 38 per cent of its consumed energy from renewable sources by In this respect, the role of forests is important as currently ~80 per cent of the bioenergy production in Finland is based on wood. Since 2000, the annual consumption of forest chips by heating and power plants has increased over fivefold to 5.4 million solid m 3 (Ylitalo, 2010). The current target is to use 8 12 million m 3 a 1 by 2020 (Finland s National Forest Programme, 2008). It has been estimated that the technical harvesting potential of forest chips is 16 million m 3 a 1 (Helynen et al., 2007). About 45 per cent of this volume could be obtained from pre-commercial and first commercial thinnings, which produce small-dimensioned wood (Hakkila, 2004). The age distribution in Finnish forests is such that the need for pre-commercial and commercial thinnings will increase in the near future (Rummukainen et al., 2003). In order to increase energy wood production in a costefficient way, its production should be integrated with Institute of Chartered Foresters, All rights reserved. For Permissions, please journals.permissions@oup.com

2 160 FORESTRY traditional industrial wood production (i.e. timber production). When producing industrial timber-like saw logs, management usually aims at fast diameter growth. This is achieved, if spacing in tree stands is wide throughout the rotation, with stocking lower than needed to maximize energy wood production. It is still open how to optimize the management when aiming at integrating the production of timber and energy wood in a balanced way. Obviously, the management operations are the same for both purposes, but they should be combined in a new way, including the rotation length. In this regard, it is important to study unconventional management regimes and try to find out management regimes to produce more energy biomass without endangering timber production. Currently, typically seedlings ha 1 are planted for the regeneration of Norway spruce (Picea abies L. Karst) on medium to fertile sites, whereas the corresponding number for Scots pine (Pinus sylvestris L.) is ~2000 seedlings ha 1 on medium to less fertile sites (Anonymous, 2006). Alternatively, direct seeding of Scots pine can be done on less fertile sites. Thereafter, the first commercial thinning (mainly for pulpwood) is typically done when the dominant stand height is ~12 to 15 m (both for Norway spruce and for Scots pine), the timing varies depending on stand density after pre-commercial thinning. However, if the stand density is relatively high in young stands (e.g. due to additional natural regeneration especially by broadleaves, seeding of Scots pine and/or if tending of seedling stand has been delayed or not done), energy wood thinning would also be an option at a dominant height of 8 14 m. If the energy wood thinning is done as whole tree harvesting, the loss of nutrients, as a result of needle loss, may lead to a subsequent decrease in the growth of the remaining trees (Kuusinen and Ilvesniemi, 2008). Therefore, it could be recommended only for stands with adequate site fertility, especially if nitrogen fertilization is not used to compensate for this nutrient loss (Anonymous, 2006). It is recommended that compensation fertilization is undertaken when the crown biomass is extracted more than once during a rotation (Skogsstyrelssen, 2001). In boreal conditions, such as in Finland, the potential for biomass production would be higher than that produced based on current traditional management recommendations solely aiming for timber production for the wood processing industry. In boreal conditions, forest growth is mainly limited by relatively low summer temperatures, short growing season and limited availability of nitrogen (Linder, 1987; Kellomäki et al., 1997). Thus, nitrogen fertilization in young stands could increase the amount of foliage (and leaf area) produced (Linder and Axelsson 1982; Vose and Allen 1988; Albaugh et al., 1998), also resulting in a larger amount of absorbed energy used in stem wood production compared with unfertilized stands (Linder and Axelsson, 1982; Linder, 1987). Fertilization has played an important role in the wood production programmes in the 1960s and 1970s in Finland, significantly increasing the growth of upland forests (Kukkola and Nöjd, 2000). However, in practice, the growth response depends, to a certain extent, on the growth preceding fertilization (Viro, 1967; Gustavsen and Lipas, 1975). Good results have been achieved especially on sites where growth has also been relatively good before nitrogen (N) fertilization. In such conditions, N fertilization of 150 kg ha 1 might be expected to increase growth by m 3 ha 1 over a rotation (Kaunisto et al., 2002). This could also positively affect both timber and energy wood production potential. When aiming at concurrently producing timber and energy wood in a cost-efficient and environmentally friendly manner, additional issues such as logging costs should be considered, which are high for small-dimensioned trees (e.g. their handling limits the capacity of the logging machines and tends to decrease the productivity of work). The profitability of energy wood thinning is also dependent on the energy wood price as well as subsidies (Laitila, 2008). Forest growth models (as ecosystem models like SIMA and statistical growth and yield models like MOTTI) are essential tools in forest management because they can be used to analyse of the sensitivity of modelled stem wood production to different silvicultural treatments (e.g. spacing, thinning, fertilization) and varying environmental conditions (e.g. Kellomäki et al., 1992; Hynynen et al., 2005). Such models could also be used to support the decision making for optimal management solutions in practical forest planning (Hynynen et al., 2005; Hyytiäinen et al., 2006; Pretzch et al., 2008). This would not be possible purely based on empirical approaches. In this study, the main aim was to investigate how to increase the production of energy biomass when producing stem wood for industrial purposes. In this context, the sensitivity of stem wood production (energy wood, pulp and saw logs) to the varying pre-commercial stand density and following commercial thinnings (timing and intensity) and nitrogen (N) fertilization (number and amount) treatments was studied based on model simulations. They concern Norway spruce and Scots pine stands grown on sites with varying site fertility by applying a fixed rotation period of 80 years. In addition to stem wood production, we also considered the effects of management on net present value (NPV, ha 1 ) to identify the cost-efficiency of management regimes. Materials and methods Outlines of the SIMA model used in the simulations This work was undertaken using the ecosystem model SIMA (Kellomäki et al., 1992; Kolström, 1998), which is a gap-type model utilizing a time step of 1 year. In the model, the growth of a tree is based on diameter growth, which is the product of the potential diameter growth and environmental factors. The model incorporates four subroutines describing the site conditions (environmental subroutines) in terms of temperature sum (degree days, d.d.), withinstand light conditions, soil moisture and soil nitrogen. In addition, a procedure for management, including thinning and fertilization, is incorporated in the model (Figure 1).

3 IMPACTS OF THINNING AND FERTILIZATION 161 Figure 1. An outline of the processes used to use the SIMA model in the study (Kellomäki et al., 2008). The environmental subroutines are linked by the multipliers to the demographic subroutines (birth, growth and death); i.e. G = G o M 1... M n, where G is growth and/ or regeneration, G o growth and/or regeneration in optimal conditions and M 1... M n multipliers for different environmental factors. The subroutine converts the temperature sum, as well as light availability, soil water and nitrogen into growth multipliers. The death of the trees is determined by the crowding with the consequent reduction in growth, which determines the risk for a tree to die at a given moment. Litter and dead trees end up on the soil to be decomposed, with the release of nitrogen in the long run. The simulation of the above processes and the consequent succession that takes place in the forest ecosystem is based on the Monte Carlo simulation technique; i.e. certain events, such as birth and death of trees, are stochastic events. Consequently, each time such an event is possible (e.g. it is possible for a tree to die every year), the algorithm selects whether or not the event will take place by comparing a random number with the probability of the occurrence of the event. The probability of an event is a function of the state of the forest ecosystem at the time when it is possible. Each run of a Monte Carlo code is one realization of all possible time courses of the forest ecosystem. Therefore, the simulation of succession in the forest ecosystem must be repeated several times (150 times in this study) in order to determine the central tendency of variations over time. The model has been parameterized for Scots pine, Norway spruce, birch (Betula pendula Roth. and Betula pubescens Ehrh.), aspen (Populus tremula L.) and grey alder (Alnus incana Moench., Willd) growing between the latitudes N 60 and N 70 and longitudes E 20 and E 32 in Finland (Kellomäki et al., 1992; Kellomäki and Kolström, 1993; Kolström, 1999). The model is run on an annual basis and the computations are applied to an area of 100 m 2. Calculation of impacts of fertilizing on growth A procedure for management includes thinning, fertilization, rotation length and harvesting of timber and energy biomass (foliage, branches, stumps and top part of stem not suitable for timber). The total amount of fertilizer (NT, kg ha 1 ), which was added in a single fertilizing event, was expected to gradually affect the growth over several years, so that the effect decreased over time (and disappeared finally). Annually, the fraction of fertilizer (F(k)) affecting the growth in the year k is ( Bk) ke F( K) =, n ( Bk) ( ke ) k= 0 where k is the time in years since fertilizing, n is the length of time in years with any addition to available nitrogen (F(k) <0.01) and the factor B is a function of the total amount of fertilizer: (1) B = 0.163ln( NT) 1.4. (2) The values of the parameters for equations (1) and (2) were estimated on the basis of works by Jonsson (1978) and Kukkola and Saramäki (1983). In the year k, the amount of fertilizers (kilograms per hectare) made available for the growth is NA(k) = F(k) N. The

4 162 FORESTRY addition of nitrogen to the amount of available nitrogen, in the years after fertilization, is illustrated in Figure 2. Performance of the model In this work, we examined the performance of the SIMA model by comparing parallel simulations for the growth of Norway spruce and Scots pine stands by the SIMA model and by statistical growth and yield model MOTTI (Hynynen et al., 2002). Because growth dynamics in the MOTTI model are based on tree growth data representing a large number of sample plots (forest inventories), this model comparison provides a good benchmark to assess the performance of the SIMA model throughout Finland. In this model validation work, we calculated the growth (cubic metres per hectare per area) for 13 different sites throughout Finland on medium fertile sites occupied by Norway spruce and Scots pine (Table 1). The temperature sum varied between 360 and 650 d.d. in the north (Ivalo) and 1300 and 1370 d.d. in the south (Helsinki). Planting density was 1800 trees ha 1 in Norway spruce and 2000 trees ha 1 in Scots pine stands. The simulation period was 80 years and the thinning rules followed those currently recommended for different tree species, site fertility types and regions of Finland (Anonymous, 2006). Fertilization at a rate of 150 kgn ha 1 was simulated twice during the rotation, once at the time of first thinning and again 10 years later. Figure 3 shows a fairly good relationship between the simulated growth values for the MOTTI and SIMA models regardless of tree species. Standard error of the unfertilized estimate was 0.71 and the fertilized estimate was The SIMA model gives per cent lower growth values than the MOTTI model. Both the results are modelled and it is impossible to say which one is the more realistic model. Calculation mechanisms are very different between the models and the data are also partly different. Matala et al. (2003) have also observed that MOTTI gives larger values for the total production especially on Norway spruce than other models. The SIMA model has also been Figure 2. Change in the available nitrogen (NA) as a function of the amount of fertilizer (N) and the time since the fertilizing. Table 1: Location, temperature sum and precipitation of simulation sites throughout Finland for model comparison work Location Temperature sum, d.d Precipitation, mm a 21 Helsinki N, E Tampere N, E Lappeenranta N, E Jyväskylä N, E Joensuu N, E Kruunupyy N, E Kajaani N, E Oulu N, E Suomussalmi N, E Kuusamo N, E Kemi N, E Rovaniemi N, E Ivalo N, E

5 IMPACTS OF THINNING AND FERTILIZATION 163 Simulated growth, m 3 ha -1 a -1, Motti-model, unfertilized Simulated growth, m 3 ha -1 a -1, Motti-model, fertilized y = x R 2 = Std. Error 0.71 Norway spruce, Scots pine y = x Simulated growth, m 3 ha -1 a -1, Sima-model, unfertilized y = x R 2 = Std. error 0.65 Norway spruce, Scots pine y = x Simulated growth, m 3 ha -1 a -1, Sima-model, fertilized Figure 3. Relationship between simulated mean annual growth of Scots pine and Norway spruce on different sites throughout Finland by the SIMA and MOTTI models for unfertilized and fertilized (2 150 kg N ha 1 ) stands. previously validated, in general, by Kolström (1998) and Kellomäki et al. (2008) in regard to forest productivity in Finnish conditions and in regard to the growth response of trees to nitrogen deposition by Mäkipää et al. (1998). Simulations The model simulations were made for the Joensuu region, in southern Finland (62.39 N, E). The temperature sum in this area is ~1150 to 1200 d.d. Simulations were undertaken for the most fertile (OMT), medium fertile (MT) and less fertile forest sites (VT) (Cajander, 1926). However, in order to reflect actual management practice, the simulations were undertaken for Norway spruce on OMT and MT sites, while for Scots pine, they were made on the MT and VT sites. In this study, we assumed 6.0 kg ha 1 as an annual N deposition. In Finland, the annual N deposition generally ranges from south to north between 10.6 and 0.9 kg ha 1, respectively (Järvinen and Vänni, 1994). The average diameter of the seedlings at the beginning of the simulation was assumed to be 2 cm, with the stand density varying between 1800 and 4500 seedlings ha 1, depending on the management regimes adopted. The thinning rules used in the simulations followed those currently recommended for the different tree species, site types and regions of Finland (Anonymous, 2006). Thinning was assumed to be from below regardless of the management regime simulated. Altogether the study simulated 18 different management regimes, in terms of pre-commercial and commercial thinning (timing and intensity), for both tree species on each of two site fertility types. Furthermore, additional simulations were carried out to consider the nitrogen fertilization (number and amount) treatments (see Table 2). The basic thinning regimes (case numbers 1 2) aiming for timber production had a pre-commercial thinning to a stand density of trees ha 1 and first commercial thinning at a dominant height (i.e. the average of the height of the 100 largest diameter trees) of 13 m to a stand density of trees ha 1. The corresponding regimes aiming at integrated timber and energy wood production (case numbers 3 18) had pre-commercial thinning to a stand density of trees ha 1 at a dominant height of 3 5 m and energy wood thinning either at a dominant height of 8 or 10 m to a stand density of 1800 trees ha 1 or 1300 trees ha 1. Second and third (if required) thinnings were simulated to reflect standard thinning recommendations, based on the basal area and dominant height development of the stand. The amount of N fertilization (0, 100, 150 and 200 kgn ha 1 ) and number of simulated fertilizer applications (not at all, two or three times during the rotation) also varied depending on the management regime. If fertilizer application was simulated, this was done at the time of first thinning at a dominant height of 8, 10 or at 13 m and thereafter once or twice more at intervals of 12 and 10 years depending on the management regime. The simulation time was 80 years, regardless of the management regime, to make them easily comparable. Calculation of NPV for modelled wood production The forest owner naturally considers the economical profitability of management when evaluating different management options. This view was also considered in this work in addition to total modelled stem wood production (incl. volume of pulpwood, saw logs and energy wood). For this purpose, the NPV ( ha 1 ) was calculated by discounting all harvesting and final felling incomes and management costs at the time of pre-commercial thinning, i.e. at the beginning of the simulation, as follows: t 1 (NPV) = R t, 1 + r (3) where r is discount rate (expressed as decimal digit in the formula), t the time of the cash flow, R t the net cash flow (the amount of cash, inflow minus outflow) at time t.

6 164 FORESTRY Table 2: Alternative management regimes used in simulations for Norway spruce (NS) and Scots pine (SP) No. Management regime Stand density (trees ha 21 ) after pre-commercial thinning/first commercial thinning with h dom (m) without/with fertilization treatment Possible N fertilization treatments are as follows: (a) 100 kg ha 21 N, (b) 150 kg ha 21 N and (c) 200 kg ha 21 N, either twice (2) or three (3) times during rotation 1 Basic thinning with baseline pre-commercial stand density NS: 1800/900 with h dom 13 a2, b2, c2, a3, b3, c3 SP: 2000/1000 with h dom 13 2 Basic thinning with moderate pre-commercial stand density NS: 2300/900 with h dom 13 b2, b3 SP: 2500/1000 with h dom 13 3 Early energy wood thinning with moderate dense pre-commercial stand NS: 2500/1300 with h dom 8 a2, b2, c2, a3, b3, c3 SP: 3000/1300 with h dom 8 4 Late energy wood thinning with moderate dense pre-commercial stand NS: 2500/1300 with h dom 10 a2, b2, c2, a3, b3, c3 SP: 3000/1300 with h dom 10 5 Early energy wood thinning with moderate dense pre-commercial stand NS: 2500/1800 with h dom 8 a2, b2, c2, a3, b3, c3 SP: 3000/1800 with h dom 8 6 Late energy wood thinning with moderate dense pre-commercial stand NS: 2500/1800 with h dom 10 a2, b2, c2, a3, b3, c3 SP: 3000/1800 with h dom 10 7 Early energy wood thinning with dense pre-commercial stand NS: 3000/1300, with h dom 8 b2, b3 SP: 3500/1300, with h dom 8 8 Late energy wood thinning with dense pre-commercial stand NS: 3000/1300, with h dom 10 b2, b3 SP: 3500/1300, with h dom 10 9 Early energy wood thinning with dense pre-commercial stand NS: 3000/1800, with h dom 8 b2, b3 SP: 3500/1800, with h dom 8 10 Late energy wood thinning with dense pre-commercial stand NS: 3000/1800, with h dom 10 b2, b3 SP: 3500/1800, with h dom Early energy wood thinning with very dense pre-commercial stand NS: 3500/1300, with h dom 8 a2, b2, c2, a3, b3, c3 SP: 4000/1300, with h dom 8 12 Late energy wood thinning with very dense pre-commercial stand NS: 3500/1300, with h dom 10 a2, b2, c2, a3, b3, c3 SP: 4000/1300, with h dom Early energy wood thinning with very dense pre-commercial stand NS: 3500/1800, with h dom 8 a2, b2, c2, a3, b3, c3 SP: 4000/1800, with h dom 8 14 Late energy wood thinning with very dense pre-commercial stand NS: 3500/1800, with h dom 10 a2, b2, c2, a3, b3, c3 SP: 4000/1800, with h dom Early energy wood thinning with extremely dense pre-commercial stand NS: 4000/1300, with h dom 8 b2, b3 SP: 4500/1300, with h dom 8 16 Late energy wood thinning with extremely dense pre-commercial stand NS: 4000/1300, with h dom 10 b2, b3 SP: 4500/1300, with h dom Early energy wood thinning with extremely dense pre-commercial stand NS: 4000/1800, with h dom 8 b2, b3 SP: 4500/1800, with h dom 8 18 Late energy wood thinning with extremely dense pre-commercial stand NS: 4000/1800, with h dom 10 b2, b3 SP: 4500/1800, with h dom 10 All simulations were done without and with N fertilizer treatment (if done without N fertilizer treatment, there is no additional letters given in case number in results chapter).

7 IMPACTS OF THINNING AND FERTILIZATION 165 The stumpage prices and management operation costs used in the study were based on the average values between the years 2000 and 2008 in North Karelia, Finland (Metinfo forest information services, 2009), i.e. for Norway spruce, average values of 48.6 and 21.3 m 3 were used for saw logs and pulpwood, respectively. The corresponding values for Scots pine were 49.1 and 13.6 m 3, respectively. Costs of pre-commercial thinning were also expected to vary, to some degree, depending on the number of trees removed. If the removal was 1000 trees ha 1 or less, its cost was expected to be 50 per cent less than if the removal was 3000 trees ha 1 or higher (Ylimartimo and Heikkilä, 2003). Thus, costs of pre-commercial thinning were expected to vary between 154 and 307 ha 1. It was assumed that in the beginning of pre-commercial thinning, there were 5000 trees ha 1 regardless of site fertility type. Regeneration costs were expected to be the same regardless of the management regime for each tree species. Regeneration costs include soil preparation (mounding) and planting of 2500 trees ha 1 in Norway spruce stands and soil preparation (scarification) and seeding in Scots pine stands. Natural regeneration was also expected to happen in planted Norway spruce stands, increasing the pre-commercial stand density and, thus, also allowing the consideration of energy wood production. However, for simplicity, it was expected that any natural regeneration was only of Norway spruce, which is not necessarily the case in practice (i.e. broadleaves often establish naturally in young coniferous stands, see Saksa and Kankaanhuhta, 2007). The cost of one fertilization treatment was expected to be 222 ha 1 (average price of fertilizer being kg 1 (see tuotantopanokset/index.jsp), of which most of the costs consist of transportation and spreading of fertilizer (for this reason, we used the same price regardless of the fertilization rate to simplify the work). The baseline for the stumpage price of energy wood was taken as 4 m 3. In energy wood thinning (at a dominant height of 8 or 10 m), all the removal, including industrial-sized stem wood, was considered as energy wood. Logging residuals were collected for energy use in all the management regimes in the final felling. Stumps and roots were not included in this study. A sensitivity analysis was also made for the effects of alternative energy wood prices of 3 5 m 3 and for the Figure 4. Relative difference (%) in stem wood production (including saw, pulp and energy wood) between each management regime and the mean for the unfertilized combination of species and site fertility. Site fertility is fertile (OMT) and medium fertile (MT) and fertilization is two or three applications of nitrogen fertilizer over a rotation.

8 166 FORESTRY effects of different discount rates of 1 4 per cent (as baseline 2 per cent was used). Results Differences in modelled wood production between different management regimes in Norway spruce on fertile and medium fertile sites On the most fertile site (OMT), the modelled stem wood production of Norway spruce (incl. saw wood, pulp, energy wood, cubic metres per hectare) varied in the range of per cent compared with the average for all the management regimes without fertilization (Figure 4). When simulating fertilizer application of 150 kgn ha 1 two or three times during the rotation, the stem wood production (cubic metres per hectare) increased up to 15 and 17 per cent (on average 5 and 10 per cent) compared with otherwise similar kind of management regimes but without fertilization. On the medium fertile site (MT), the modelled stem wood production of Norway spruce (cubic metres per hectare) varied in a similar range, being per cent, compared with the average for all the management regimes without fertilization (Figure 4). Again, simulated fertilizer application clearly increased the stem wood production: when applying fertilizer of 150 kgn ha 1 two or three times during the rotation, the stem wood production (cubic metres per hectare) increased. The increase was even higher on the medium fertile site than on the most fertile site, i.e. up to 24 and 22 per cent (on average 8 and 16 per cent) compared with otherwise similar kind of management regimes but without simulated fertilizer application. Regardless of site fertility type, the modelled stem wood production during the rotation was the highest for Norway spruce when the pre-commercial stand was very dense and late energy wood thinning was modelled together with simulated fertilizer application of 200 kgn ha 1 three times during the rotation (management regime 14c3), i.e. being 15 and 16 per cent higher (476 and 423 m 3 ha 1 ) than the averages for the most fertile and medium fertile site. Furthermore, the share of energy wood production (cubic metres per hectare) was, on average, 4 16 and 3 16 per cent of total modelled stem wood production on these site types (OMT and MT) when management regimes integrating timber and energy wood production were simulated (Figure 5). In general, simulated fertilizer application clearly increased the modelled stem wood production. The effect of the amount of N fertilizer applied in the simulations (i.e kgn ha 1 ) was small (on average 3 4 per cent difference observed) regardless of site type. Figure 5. The proportion of wood assortments of Norway spruce for different management regimes on two site fertility types with (two or three times during rotation) or without fertilization of 150 kg N ha 1.

9 IMPACTS OF THINNING AND FERTILIZATION 167 Differences in modelled wood production between different management regimes in Scots pine on medium fertile and less fertile sites On the medium fertile site (MT), the modelled stem wood production of Scots pine (incl. saw wood, pulp, energy wood, cubic metres per hectare) varied in the range of per cent compared with the average for all the management regimes without simulated fertilizer application (Figure 6). In general, simulated fertilizer application clearly increased the modelled stem wood production, as it did for Norway spruce. When simulating fertilizer application of 150 kg N ha 1 two or three times during the rotation, the modelled stem wood production (cubic metres per hectare) increased the most, i.e. up to 8 and 10 per cent (on average 4 per cent) compared with otherwise similar kind of management regimes but without simulated fertilizer application. On the less fertile site (VT), the modelled stem wood production for Scots pine (cubic metres per hectare) varied in a similar range of per cent compared with the average for all management regimes without simulated fertilizer application (Figure 6). Again, simulated fertilizer application clearly increased the modelled stem wood production as it did on the medium fertile site. When applying fertilizer at 150 kgn ha 1 two or three times during the rotation, the modelled stem wood production (cubic metres per hectare) increased the most and even more than on the medium fertile site, i.e. up to 25 and 23 per cent (on average 11 and 17 per cent) compared with otherwise similar kind of management regimes but without simulated fertilizer application. Over all the different management regimes (including all unfertilized and fertilized ones), modelled stem wood production varied for Scots pine in an average range of per cent and per cent on the medium fertile site (MT) and the less fertile site (VT), respectively. On the medium fertile site (MT), the modelled stem wood production was the highest for Scots pine (455 m 3 ha 1, 9 per cent higher than average) when the pre-commercial stand was very dense and late energy wood thinning was modelled together with simulated fertilizer application of 200 kgn ha 1 twice during the rotation (management regime 14c2). As a comparison, on the less fertile site (VT), modelled stem wood production was the highest (348 m 3 ha 1, 12 per cent higher than average) when the pre-commercial stand was a moderate dense and early energy wood thinning was modelled with simulated fertilizer application of 150 kgn ha 1 twice during the rotation (management regime 5b2). Furthermore, the share of energy wood production (cubic metres per hectare) was, on average, 5 15 (MT Figure 6. Relative difference (%) in stem wood production (including saw, pulp and energy wood) between each management regime and the mean for the unfertilized combination of species and site fertility. Site fertility is medium fertile (MT) and less fertile (VT) and fertilization is two or three applications of nitrogen fertilizer over a rotation.

10 168 FORESTRY site type) and 3 19 per cent (VT) of total modelled stem wood production in Scots pine when management regimes integrating timber and energy wood production were simulated (Figure 7). The effect of the amount of N fertilizer applied in the simulations (i.e kgn ha 1 ) was also small (on average 2 5 per cent difference observed) regardless of site type. Comparison of NPVs for different management regimes in Norway spruce on fertile and medium fertile sites On the most fertile site (OMT), the NPV for Norway spruce varied in the range of per cent compared with the average for all the management regimes without simulated fertilizer application, when a discount rate of 2 per cent and an energy wood price of 4 m 3 were used in the NPV calculations (Figure 8). The highest NPV (2657 ha 1, 8 per cent higher than average) was obtained when the pre-commercial stand was extremely dense and early energy wood thinning was modelled without any simulated fertilizer application treatment (management regime 15). However, no clear difference was observed in NPV between the best management regimes aiming for timber production alone and integrated timber and energy wood production without simulated fertilizer application (e.g. management regimes 2 and 15). When N fertilization of 150 kgn ha 1 was simulated two or three times during the rotation, the NPV varied in the range of per cent and per cent compared with the average for all the management regimes with simulated fertilizer application treatment. The highest NPV (3047 ha 1, on average 20 per cent higher than average) for all management regimes with simulated N fertilization treatment was obtained when the pre-commercial stand was extremely dense and late energy wood thinning was simulated together with N fertilization of 150 kgn ha 1 twice over a rotation (management regime 18b2). It also had 15 per cent higher NPV compared with the management regime (15) without N fertilization. If N fertilization was simulated two or three times during the rotation, the NPV increased, on average, by 3 and 5 per cent compared with otherwise similar kind of management regimes but without fertilization (Figure 8). However, a clear difference was observed in NPV between the management regimes having the highest NPV but aiming either for integrated timber and energy wood production (10 per cent higher NPV than the highest basic management) or for timber production alone with fertilization (e.g. management regimes 18b2 and 1c3). Figure 7. The proportion of wood assortments in Scots pine for different management regimes on two site fertility types with (two or three times during rotation) or without fertilization of 150 kg N ha 1.

11 IMPACTS OF THINNING AND FERTILIZATION 169 Figure 8. Relative difference (%) in NPV with 2% discount rate and with energy wood price of 4 m 3 between each management regime and the mean for the unfertilized combination of species and site fertility. Site fertility is fertile (OMT) and medium fertile (MT) and fertilization is two or three applications of nitrogen fertilizer over a rotation. On the medium fertile site (MT), the NPV for Norway spruce varied in the range of per cent compared with the average for all the management regimes without fertilization, when a discount rate of 2 per cent and an energy wood price of 4 m 3 were used in NPV calculations (Figure 8). The highest NPV (1984 ha 1, 16 per cent higher than average) was obtained when basic thinning was done in the stands representing moderate stand density (management regime 2). However, a clear difference was observed in NPV (9 per cent higher NPV than the highest energy wood management) between the management regimes with the highest NPV but aiming for timber production alone and integrated timber and energy wood production without fertilization (e.g. management regimes 2 and 18) (see Figure 8). When N fertilization of 150 kgn ha 1 was simulated two or three times during the rotation, the NPV varied in the range of per cent and per cent, respectively compared with the average for all the management regimes with fertilization treatment. The highest NPV (2406 ha 1 ), i.e. 23 per cent higher than average for all management regimes with N fertilization treatment, was obtained when the pre-commercial stand was moderately dense and basic thinning was simulated together with N fertilization of 150 kgn ha 1 three times over a rotation (management regime 2b3). It also had 21 per cent higher NPV compared with the management regime (2) without N fertilization. If N fertilization was simulated two or three times during the rotation, the NPV increased, on average, by 11 and 19 per cent compared with otherwise similar kind of management regimes but without fertilization (Figure 8). However, a clear difference was observed in NPV between the best management regimes aiming for integrated timber and energy wood production (7 per cent higher NPV than the highest energy wood management) and timber production alone with fertilization (e.g. management regimes 2b3 and 15b3). Comparison of NPVs for different management regimes for Scots pine on medium fertile and less fertile sites On the medium fertile site (MT), the NPV for Scots pine varied in the range of per cent compared with the average for all the management regimes without fertilization, when a discount rate of 2 per cent and an energy wood price of 4 m 3 were used in the NPV calculations (Figure 9). The highest NPV (3272 ha 1, 5 per cent higher than average) was obtained when basic thinning was done in the stands representing moderate stand density (management regime 2). However, no clear difference was observed

12 170 FORESTRY Figure 9. Relative difference (%) in NPV with 2% discount rate and with energy wood price of 4 m 3 between each management regime and the mean for the unfertilized combination of species and site fertility. Site fertility is medium fertile (MT) and less fertile (VT) and fertilization is two or three applications of nitrogen fertilizer over a rotation. in NPV between the best management regimes aiming for timber production alone and integrated timber and energy wood production without fertilization (e.g. management regimes 2 and 15). When N fertilization of 150 kgn ha 1 was simulated two or three times over the rotation, the NPV varied in the range of per cent and per cent, compared with the average for all the management regimes with fertilization treatment. The highest NPV (3040 ha 1, on average 10 per cent higher than average) for all management regimes with N fertilization treatment was obtained when the pre-commercial stand was extremely dense and early energy wood thinning was simulated together with N fertilization of 150 kgn ha 1 twice during the rotation (management regime 15b2). It had a 5 per cent higher NPV compared with the management regime (15) without N fertilization. If N fertilization was simulated two or three times during the rotation, the NPV increased, on average, only up to 1 per cent compared with otherwise similar kind of management regimes but without fertilization. There was also no clear difference regarding NPV between the management regimes having the highest NPV but aiming for integrated timber and energy wood production (5 per cent higher NPV than the highest basic management regime) and timber production alone with fertilization (e.g. management regimes 15b2 and 2b2). On the less fertile site (VT), the NPV for Scots pine varied in the range of per cent compared with the average for all the management regimes without fertilization, when a discount rate of 2 per cent and an energy wood price of 4 m 3 were used in the NPV calculations (Figure 9). The highest NPV (1532 ha 1, 9 per cent higher than average) was obtained when basic thinning was done in the stands representing moderate stand density (management regime 2). However, no clear difference was observed in NPV between the best management regimes aiming for timber production alone and integrated timber and energy wood production without fertilization (e.g. management regimes 2 and 3). When N fertilization of 150 kgn ha 1 was simulated two or three times over the rotation, the NPV varied in the range of per cent and per cent, respectively, compared with the average for all the management regimes with fertilization treatment. The highest NPV (1862 ha 1, 19 per cent higher than average) for all management regimes with N fertilization treatment was obtained when the pre-commercial stand was very dense and late energy wood thinning was applied together with N fertilization of 150 kgn ha 1 three times during the rotation (management

13 IMPACTS OF THINNING AND FERTILIZATION 171 regime 12b3). The same result was observed when basic thinning was simulated together with N fertilization of 200 kgn ha 1 three times during the rotation. It had 18 per cent higher NPV compared with the best management regime (2) without N fertilization. If N fertilization was simulated two or three times during the rotation, the NPV increased, on average, by 11 and 18 per cent compared with otherwise similar kind of management regimes but without fertilization (Figure 9). However, no clear difference was observed in NPV between the management regimes with the highest NPV but aiming for integrated timber and energy wood production and timber production alone with fertilization (e.g. management regimes 12b3 and 1c3). Sensitivity analysis No major difference was observed, regarding the NPV for Norway spruce, between different management regimes for the same discount rate and energy wood price, regardless of site fertility type (OMT and MT). However, on the most fertile sites (OMT), the two management regimes having the highest NPV when integrating timber and energy wood production had a higher NPV than the corresponding two basic management regimes (with and without N fertilization) and regardless of energy wood price if the discount rate varied between 0 to 3 per cent. However, with a discount rate of 4 per cent, they had a higher NPV only if the energy wood price was 5 m 3, if no N fertilization was simulated. With N fertilization, the result was opposite (Figure 10). On medium fertile sites (MT), the two basic management regimes had slightly higher NPV than the corresponding two management regimes integrating timber and energy wood production with the discount rates 1 4 per cent (with and without N fertilization). With discount rate 0 per cent, the result was opposite regardless of energy wood price (3 5 m 3 ) (Figure 10). As a comparison, in Scots pine grown on medium fertile (MT) sites, the NPV of the corresponding basic management regimes was only slightly higher than in the corresponding management regimes having the highest NPV when integrating timber and energy wood production with Figure 10. NPV ( /ha) of the two basic management regimes with the highest NPV and corresponding two management regimes integrating timber and energy wood production with the highest NPV for different discount rates and energy wood prices for Norway spruce and Scots pine grown on different site fertility types.

14 172 FORESTRY discount rates of 0, 1 and 2 per cent without fertilization. However, the result was opposite: i.e. integrating timber and energy wood production has the highest NPV, with a discount rate of 3 per cent and energy wood price of 5 m 3. The situation was the same with N fertilization regardless of discount rate and energy wood price (Figure 10). On less fertile sites (VT), the corresponding management regimes having the highest NPV when integrating timber and energy wood production had a higher NPV than the corresponding basic management regimes regardless of discount rate and energy wood price (Figure 10). Discussion and conclusions Evaluation of the approach The main aim of this study was to analyse the sensitivity of stem wood production in regard to energy wood, pulp and saw logs to the varying pre-commercial stand density and thinning (timing and intensity) and nitrogen (N) fertilization (number and amount) treatments applied in Norway spruce and Scots pine stands grown on sites with varying site fertility over a fixed rotation period of 80 years. In addition to stem wood production, we also considered the effects of management on its NPV ( ha 1 ). For this work, we did altogether 360 forest ecosystem model simulations by SIMA model, 90 simulations for each tree species and site fertility types. The performance and validity of the forest ecosystem model SIMA used in this study have earlier been discussed in detail in some previous studies (e.g. Kolström 1998; Kellomäki et al., 2008). In this work, the performance of the SIMA model was also compared against corresponding growth simulations from the statistical growth and yield model MOTTI (Hynynen et al., 2002). As a result, a fairly good correlation between the simulated growth by the models for Scots pine and Norway spruce was found. However, the SIMA model outputs per cent lower growth compared with the MOTTI model. The recent analyses of the SIMA model predictions in regard to the growth response of trees to nitrogen deposition have also shown reasonable agreement between model predictions and measurements based on long-term experimental data (see Mäkipää et al., 1998). In the model simulations, the pre-commercial stand density ranged from 1800 to 2500 (representing basic management regimes) up to 4500 trees ha 1 (representing integrated management for timber and energy wood) regardless of tree species and site fertility type. For basic management regimes, the first commercial thinning was also typically done at a dominant height of 13 m regardless of tree species and site fertility type (resulting in stand density of 900 trees ha 1 for Norway spruce and 1000 trees ha 1 for Scots pine). For the regimes aiming at integrated timber and energy wood production, energy wood thinning was done either at a dominant height of 8 or 10 m regardless of tree species and site fertility type (resulting in stand density of 1800 and 1300 trees ha 1, respectively). The remainder of the possible thinnings followed the currently applied thinning recommendations for Finnish conditions regardless of the management objectives. The amount (0 200 kgn ha 1 ) and number (zero to three times) of N fertilization treatments during the rotation (80 year simulation period) also varied depending on the management regime. Usually, the high pre-commercial stand density in Scots pine is a result of seeding or natural regeneration (or both). Whereas in Norway, spruce planting is the most typical regeneration method and additional pre-commercial stand density is largely resulting from the natural regeneration of broadleaf trees. However, to simplify this work, we applied mono-species stands in the model simulations and expected natural regeneration to increase the density of the seedling stand in Norway spruce stands regardless of site fertility type. This may be expected to output slightly too optimistic results for some management regimes aiming at integrated timber and energy wood production in Norway spruce (although energy wood price would not vary depending on tree species). However, also according to the recent regeneration studies (Saksa and Kankaanhuhta, 2007), natural regeneration (e.g. in southern Finland) is often needed in planted stands to get sufficiently high stand density for sustainable modelled stem wood production because natural mortality is typical in young seedling stands. In this sense, the recommended planting density of Norway spruce could be to some degree higher (e.g. up to 2500 trees ha 1 as we used in simulations) than that recommended currently (being trees ha 1 ) in Finland. Evaluation of the results According to our results, the integration of timber and energy wood production did not decrease, on average, the amount (cubic metres per hectare) of industrial wood. On average, the highest modelled stem wood production was found both in Norway spruce and in Scots pine regardless of site fertility, when the pre-commercial stand density was extremely or very dense and late energy wood thinning was simulated. Fertilization clearly increased the modelled stem wood production in both tree species, but the differences between different N fertilization rates (100, 150 and 200 kgn ha 1 ) were negligible. In energy wood harvesting, industrial-sized stem wood was also included in energy wood removal. With a discount rate of 2 per cent and energy wood price of 4 m 3, NPV did not vary largely regardless of the management regime. However, in general, it was the highest when the pre-commercial stand was extremely or very dense, making early revenue possible. Only on fertile sites were the highest total modelled stem wood production and NPV attained with the same management regime. In both Norway spruce and Scots pine, the effects of fertilization on total modelled stem wood production and NPV were the largest in relative terms, and were quite similar to each other, on less fertile site types. When applied to the most fertile sites (OMT), simulated fertilization

15 IMPACTS OF THINNING AND FERTILIZATION 173 increased total modelled stem wood production and NPV for Norway spruce by, on average, 7 and 3 per cent, respectively. The corresponding numbers on medium fertile sites (MT) were 12 and 14 per cent, respectively. As a comparison, in Scots pine, the corresponding average values were 3 and 0.4 per cent on MT sites and 13 and 12 per cent on less fertile sites (VT). The larger relative effects of fertilization on the less fertile sites in both tree species can be explained by the lower initial amount of soil nitrogen. On the other hand, on medium fertile sites (MT), Scots pine produced, on average, more stem wood and higher NPV than Norway spruce. On these sites, higher precommercial stand density is also preferred in Scots pine because it is expected to provide better stem quality as a result of reduced branch growth and the earlier death of branches near the stem base (e.g. Kellomäki et al., 1999). Based on our findings, the density of pre-commercial stands could be increased, at least to some degree, to increase the stand productivity as well as the economic profitability of the management. However, it should be noted that during the first years after the first commercial thinning, the risk of wind and snow induced damages is relatively high in stands which have been very dense before thinning and/or in which first thinning has been greatly delayed (e.g. Peltola et al., 1999). Furthermore, the increased risk of snow damage after fertilizing young stands should not be ignored (Hirvelä and Hynynen, 1990; Valinger and Lundqvist, 1992). The risk of damage is highest during the first few years after fertilization, and it is especially high if simultaneous thinning and fertilization have been applied. Also in our study, fertilization was first simulated at the time of first thinning but thereafter with an interval of years (however, the risks of wind and snow damages were not considered in simulations). In practice, fertilization has been found to be most profitable if it is done ~10 to 15 years before final cutting, providing even 20 m 3 ha 1 increase of growth and 17 per cent interest rate for the investment. If it is done earlier, it may be recommended that it will be done ~10 years before thinning in order to get a return on the investment on fertilizer in the following thinning (Mielikäinen and Riikilä, 1997). Further research is still needed on the long-term effects of intensive and continual recovery of energy wood on stand productivity (Kuusinen and Ilvesniemi, 2008). The harvesting of logging residues increases the loss of nutrients, which may affect the long-term site productivity (Tamm, 1969; Mälkönen, 1976). According to Jacobson et al. (2000), whole tree harvesting reduces tree volume growth in both Scots pine and Norway spruce stands (5 and 6 per cent, respectively) during the first 10 years after felling. The leaching of nutrients is the main problem following fertilization. In Finnish studies, nitrogen leaching has been in the first year after fertilization, up to 10 per cent, but in the second year, <1 per cent on mineral soils (Saura et al., 1995). It is common that leaching of nitrogen is quite a short-term problem lasting 1 3 years (Saura et al., 1995). Through the use of slow-release fertilizers, the environmental risks of nutrient leaching after fertilization are also much lower than in the case of fast-release fertilizers (Saarsalmi and Mälkönen, 2001). According to our results, on fertile sites, energy wood prices have to be 3 m 3, while on medium fertile sites 11 m 3 for Norway spruce so that NPV, with discount rate of 2 per cent, makes integrated timber and energy wood production more profitable than basic management regimes if no subsidies are taken into consideration and N fertilization is used. For Scots pine stands on medium fertile and less fertile sites, the corresponding energy wood prices should be 4 and 3 m 3, respectively. Heikkilä et al. (2009) argued that without subsidies, the energy wood price will have to be >8 and >5 m 3 on medium fertile Norway spruce and Scots pine stands, respectively (no fertilization considered, with a discount rate of 3 per cent). Altogether, the stumpage prices of timber assortments and energy wood, as well as the cost of silvicultural measures have, in addition to the discount rate, a significant influence on the economic profitability of different management regimes. The state subsidies are also essential for economic viability because the level of common stumpage price of energy wood is currently low. Although the forest owner makes their own management decisions, the profitability of the energy wood production has to be considered also from the other players perspective. This is because the other players in the energy sector are not willing to participate if there is not the possibility of profitable operations. The cutting and forest transportation costs are markedly affected by stand properties, especially by the average tree size (Heikkilä et al., 2009). Delaying energy wood harvesting sharply decreases the costs. However, it may have both positive (e.g. timber quality in Scots pine) and negative (e.g. risks by wind and snow) effects on timber production. Conclusions The modelled stem wood production was found to be sensitive to the management applied (i.e. pre-commercial stand density, thinning and N fertilization treatments) in Norway spruce and Scots pine stands grown on various sites over a fixed rotation period of 80 years. The simulations undertaken for this study indicated that, on average, the highest modelled stem wood production and NPV were found regardless of tree species and site fertility, when the pre-commercial stand was denser that currently recommended in Finnish forests and energy wood thinning was initiated at dominant height of 10 m. Furthermore, N fertilization of kgn ha 1 two or three times during the rotation clearly increased the modelled stem wood production. However, the energy wood price should be up to 11 m 3 to make the integration of timber and energy wood production more profitable than that solely focussing on timber production without any subsidies. There is annually ~ hectares of forests in Finland that need urgent pre-commercial thinning (National Forest Inventory, 2008). These forests are potential targets for energy wood thinning. However, the energy wood thinning would