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regeneration, silviculture, forest investments, profitability, IRR
The historical development of silviculture has been closely related to an increasing need for timber, which resulted in more planted forests and artificial regeneration over time. The idea of natural regeneration through shelterwood cutting was often not accepted by forest owners as a management practice because of inadequate financial returns and less certain outcomes. Despite the evolving dominance of planted forests, questions remain if the lower costs of natural regeneration may still provide sufficient profitability of forest investments. In this paper, the profitability of planted versus natural forest management in Poland and the U.S. South was examined. A discounted cash flow model was developed to evaluate the profitability of artificial and natural regeneration in hypothetical Scots and loblolly pine stands in Poland and the U.S. South, respectively, and hardwood stands (dominated by oak spp.) in both countries. The results have shown that for both countries and species, natural regeneration regimes produce higher internal rates of return (IRR), largely due to less expensive establishment costs. The largest difference in returns is observed for hardwood in the US South (97 basis points, bps, or almost 1 percentage point), followed by pine in the US South (84 bps) and pine and hardwood in Poland (both ca. 70 bps). Southern pines in the U.S. South may have larger net present values (NPV) at moderate discount rates, as well as provide more certain wood production outcomes, which have contributed to their pervasive adoption. We conclude that natural stand forest management, in addition to better rates of return, may bring other non-financial benefits (e.g., genetic diversity, resilience), which may support forest owners and the environment, especially under changing climate conditions. Nevertheless, the regeneration method and its feasibility and profitability should be carefully considered on a case-by-case basis for each forest investment.