FESIM: A Modular Forest Economic Simulation Model

Central European forestry often operates on production cycles of 100–200 years, far exceeding those of most land-use sectors. Silvicultural and political decisions taken today yield observable economic consequences only after decades or centuries, making direct empirical evaluation challenging for forest practitioners and policy-makers. This challenge has intensified with the shift towards conservation- and ecosystem services-oriented policy, which must reconcile roundwood production with biodiversity conservation, carbon sequestration, and other ecosystem services under stringent national and supranational legislation. 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 using explicit matrices and vectors, 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. The parsimonious data requirements and deterministic structure ensure that FESIM is transparent, reproducible, and computationally efficient, facilitating its application in data-scarce regions and routine decision-making. The overarching objective of FESIM is to integrate the ecological and economic dimensions, thereby providing a versatile decision-support tool capable of evaluating long-term trade-offs and sustainability outcomes across diverse management, market, and policy scenarios.