The Financial Viability and Sustainability Benefits of Converting Slash Into Biochar Instead of Open-Burning Following Fuel Treatments in the White River National Forest

Abstract

The state of Colorado has 22.49 million acres of forestland, a growing proportion of which is under threat from disease, insects, drought and wildfire. The severity of these threats originates from a long history of misguided forest management practices that have decreased the overall health of Colorado forests. Federal, state, and local land management agencies have evolved to recognize and correct for past management mistakes, but a lot of damage has been done. These agencies need to continue with practices that will restore Colorado forests to a healthier state but are faced with financial and social barriers to doing so. The aim of this study was to determine if the production of biochar from slash can be used to improve the health of Colorado’s forests. Slash is the organic material left over following forestry projects. Biochar is the solid product leftover after combusting slash in an oxygen diminished environment and is used to improve soils and sequester carbon from the atmosphere. My main research question asked if the economic, environmental and social benefits of producing biochar are sufficient to induce the inclusion of a biochar industry within the state to assist with restoring forest health. I hypothesized that a cost-benefit analysis (CBA) model will show that a biochar industry when included with current practices will make forest management projects more financially viable than current methods. Data to address the research question were obtained by contacting companies, individuals, government departments, trade associations and others. The data was input into a CBA spreadsheet that linked operational, environmental and social costs to a set of independent and derived variables. The model was set up using a full-cost accounting framework to calculate key financial appraisals and valuations of social and environmental impacts of a commercial biochar operation operating in the Roaring Fork Valley of Colorado over a ten-year period (2021 – 2031). The model was run to calculate changes in gross profit and net present value (NPV) under different operating conditions. Different scenarios were modeled by varying the values in the independent variables sub-set including tons of slash available, different equipment values, and price of finished biochar. Metrics evaluated included the financial, environmental and social impact of producing biochar for forest restoration; adding biochar to forest soils as an amendment, and long-term sequestration of carbon as biochar. Sensitivity analysis for variations of +/- 25% on baseline values was conducted in order to establish which variables have the greatest impact on gross profit and NPV. The model indicated the importance of a stable price at or above $350 per US ton for finished biochar. Below that price a biochar operation could be profitable only with a subsidy for carbon emissions sequestered by the production of biochar. The model indicates profitability of the operation given the inclusion of a carbon subsidy based on medium estimates for the price of sequestered carbon. The main implication of the thesis is that including biochar in forest restoration projects can reduce the cost of projects, improve the overall health of forest ecosystems, remove and sequester carbon from the carbon cycle, and provide a boost to local economies. All of these benefits suggest that biochar production should be encouraged on public lands and that financial incentives to do so may be very economical.