Estimating Values of Carbon Sequestration and Nutrient Recycling in Forests: An Application to the Stockholm-Mälar Region in Sweden

We calculate values of forest carbon sequestration and nutrient recycling applying the replacement cost method. The value is then determined as the savings in costs by the replacement of more expensive abatement measures with these ecosystem services in cost-effective climate and nutrient programs. To this end, a dynamic optimization model is constructed, which accounts for uncertainty in sequestration. It is applied to the Stockholm-Mälar region in southeast Sweden where the EU 2050 climate policy for carbon emissions and the Baltic Sea action plan for nutrient discharges are applied. The results show that the value of carbon and nutrient sequestration can correspond to approximately 0.5% of the region’s gross domestic product, or 40% of the value of productive forest. The largest part of this value is attributed to carbon sequestration because of the relative stringency in targets and expensive alternative abatement measures. However, sequestration is uncertain because of stochastic weather conditions, and when society has a large risk aversion for not attaining climate and nutrient targets, the values of the forest carbon and nutrient sequestration can approach zero.