Fuel treatments are used in overstocked, fire-prone forests to alter wildfire behavior and reduce fire risk. Some of the benefits they provide are not captured in markets, and therefore represent unaccounted environmental externalities that can lead to inefficient decision making. This study uses a replicable method to integrate market and nonmarket economic values into a comprehensive economic evaluation of fuel treatment and bioenergy production using a case study of ponderosa pine and mixed-conifer forests in Colorado's wildland-urban interface. Treatment costs and people's willingness to pay for better forest health, lower likelihood of wildfire, improved air quality, and expanded renewable energy production are incorporated into techno-economic analysis of biopower production. Results show that fuel treatments are likely to be undervalued when evaluated strictly on a financial basis. Under the standard practice of disposing of treatment residues through pile-burning, net present value (NPV) of fuel treatment on 138,034 ha over 20 years is -$275 million, without consideration of nonmarket benefits. If nonmarket benefits associated with forest health, wildfire likelihood and air quality are included, NPV improves to -$116 million. Without the consideration of nonmarket benefits, when treatment resides are used for biopower production, NPV is -$178 million, with net cost savings compared to pile burning attributable to reduced biomass disposal costs and electricity revenue. Accounting for additional air quality benefits and nonmarket value associated with renewable energy, the bioenergy scenario improves NPV to -$25 million, with 27.7% of outcomes having positive NPV. The impact of additional nonmarket values and potential revenues from timber harvest are discussed, and are likely to make mean NPV positive for this scenario.
Keywords: Bioenergy; Fuel treatment; Nonmarket valuation; Techno-economic analysis; Woody biomass.
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