Assessing the economic feasibility of integrating wood processing and energy generation in forest management: a case study from a forestry-centric district in temperate South Korea

Climate change necessitates urgent action across all sectors, including forestry, which remains underdeveloped in some countries—especially South Korea, where the carbon sequestration capacity of forests is declining due to tree aging. To address this challenge, a circular forest management system is crucial for promoting wood utilization and regeneration with climate-resilient species. This study develops a regional-scale sustainable forest management model that integrates wood production, processing, and biomass energy generation, and evaluates its economic viability in Goesan-gun, a forestry-centric district in South Korea. Data from timber production and wood-related industries were used to quantify outputs across the supply chain, including roundwood, processed wood, and energy, and to calculate cash flows encompassing annual investment requirements and revenues. The analysis also incorporated carbon credits and renewable energy certificates, which have become essential market instruments in the context of climate change. Results showed that total wood production from the 22,900-hectare project area amounted to 2,265,235 m 3 (approximately 56,631 m 3 annually), which is 2.6 times higher than the national average. The overall economic assessment indicates positive feasibility, with a net present value (NPV) of US$25.3 million, an internal rate of return (IRR) of 13.1%, and a benefit–cost ratio (BCR) of 1.17, considering carbon credits and renewable energy incentives. However, the wood processing sector alone was not economically feasible (NPV: –US$1.9 million; IRR: 1.1%), indicating a potential disconnect in the supply chain. These results indicate that forestry investment can be economically viable, but integrated governance is required to bridge sectoral financial gaps and sustain a regional-level forestry value chain.