A Framework for Profitability-Focused Land Use Transitions between Agriculture and Forestry

Understanding when and where to shift land from agriculture to forestry is essential for developing sustainable land-use strategies that balance climate, biodiversity, and rural development goals. Traditional profitability comparisons rely on long-term discounting, which is sensitive to assumptions and misaligned with the decision-making horizons of landowners and policymakers. This study introduces a deposit-based framework that treats annual timber biomass growth as accumulating economic value, enabling direct comparison with yearly agricultural profits on a per-hectare basis. By integrating parcel-level spatial data, land quality indicators, national statistics, and expert input, the framework generates high-resolution maps of annual profitability for both land uses. Applied in Latvia, the analysis reveals significant regional variation in agricultural returns, with many low-quality areas showing marginal or negative profits, while forestry offers stable, modest gains across diverse biophysical conditions. The results highlight where afforestation becomes a financially rational alternative and suggest transition pathways that enhance overall land-use profitability while supporting climate and biodiversity objectives. The framework is transferable to other contexts by substituting context-specific data on land quality, prices and growth, and can complement policy instruments such as performance-based CAP payments and afforestation support. The approach supports future-oriented differentiated land-use planning using annually updated spatial economic signals.