FESIM: A Modular Forest Economic Simulation Model

Abstract The Forest Economic Simulation Model (FESIM) is a dynamic, modular framework that generates integrated ecological and economic projections for forest enterprises under varying scenarios. Fully formulated in linear algebra, the model ensures complete reproducibility and interpretability. The use of a single forest inventory snapshot or management-plan data, augmented with (rudimentary) inputs such as area, yield tables, survival probabilities, and roundwood prices, enables FESIM to simulate the five-year time-step development of stand areas, roundwood volumes, carbon pools, and key economic metrics. The model integrates a Markov chain area-transition module with parameterised sigmoid functions to project growth and harvesting volumes, which are then fed into a valuation module employing multi-tier contribution-margin accounting. This approach captures profitability at successive cost allocation levels, ranging from stumpage values to net returns, thereby enabling the quantification of opportunity costs associated with conservation-oriented practices and policies. Optional submodules address habitat-tree retention and the dynamics of coarse woody debris, thereby establishing a direct linkage between biodiversity and carbon, on the one hand, and economic outputs, on the other. Crucially, the model overcomes the challenges of data-scarce regions by integrating pre-processed data, such as parameterised yield tables, effectively leveraging prior knowledge to ensure robust application.