AGRICULTURE LAND AFFORESTATION WITH FAST-GROWING WOODY CROPS: ECONOMIC EVALUATION ACCORDING TO YIELDS OF PREVIOUS EXPERIMENTAL TRIALS

Abstract

European Union (EU) aims to increase the share of renewable energy in total energy consumption in the next decades. The main renewable resource, which is mentioned in the policy documents, is biomass, especially wood biomass. Wood biomass for energy purposes could be successfully acquired from fast-growing woody plantations, growing on non-used agricultural lands. In Latvia, in 2019 were around 250 000 ha non-used agriculture land and part of it could be used for plantation growing. In Latvia, suitable woody species for use in plantations are willow, hybrid aspen, and grey alder. For economic calculations plantation site preparation before planting, planting, management, and biomass harvest costs were calculated, as well as revenues from selling biomass. In total 7 different plantation models were evaluated. Comparing the economic indicators for fast-growing woody crop plantation models during their cultivation and applying a discount rate of 7.63%, average service costs and product selling prices for the period 2015-2019, and under the existing plantation support system in 2021, intensively managed willow plantations, extensively managed willow plantations and hybrid aspen agroforestry plantations show positive accumulated cash flow. Hybrid aspen woody plantations and plantation forest, and grey alder energy wood and woody plantations show a negative accumulated cash flow, and their establishment in 2021 does not pay off. Factors that mostly affect plantation cash flow and therefore economic return are the biomass selling price and harvested biomass volume.