An economic assessment of using the allowable cut effect for enhanced forest management policies: an Alberta case study

In Canada, forest policymakers are considering the allowable cut effect (ACE) as a potential mechanism to provide tenure holders with incentives to practice enhanced forest management. To investigate the incentives created by the ACE, this paper estimates returns to ACE investments for a trembling aspen (Populus tremuloides Michx.) - white spruce (Picea glauca (Moench) Voss) mixedwood forest in Alberta. A timber supply model is used to optimize harvesting schedules to maximize net present values over a 200-year planning horizon. A number of scenarios are investigated with variations in intensity of silvicultural investments, beginning age-class distributions, levels of flexibility around the allowable annual cut (AAC), calculations of AACs based on coniferous and mixedwood volumes, and green-up constraints. In our simulations, it was difficult to find positive returns to the ACE. Positive returns only occurred when operating under harvesting constraints with a mature starting forest and AAC calculations that ignored deciduous volumes. In those limited cases where there were positive returns to the ACE, returns were higher for extensive, rather than intensive investments. Combining these results with other potential impediments to the ACE, previously identified in the literature, the probability of tenure holders having incentives to undertake ACE investments is low.