Effect of dendroremediation incentives on the profitability of short-rotation woody cropping of Eucalyptus grandis

Reclamation of municipal wastewater is one of the growing concerns of expanding urban centers. Tree crops are thought to provide not only an effective remediation solution but also a desirable rural landscape in the wildland-urban interface (WUI). Economic incentives can contribute to the economic viability of dendroremediation of reclaimed water in the WUI. A modified Faustmann optimization model has been applied to address the dendroremediation of municipal wastewater under Eucalyptus grandis coppice systems. Results suggest that each $1 kg^-1 N increase in the dendroremediation incentive increases forestland value by $223-376 ha^-1 ($90-152 acre^-1), depending on the interest rate and site productivity. Profitability is highly sensitive to the cost of irrigation and the growth function, both of which might be controllable. Accounting for the dendroremediation service as a flow benefit rather than a stock benefit increases net returns by $61-64 ha^-1 ($25-26 acre ^-1) and $138-148 ha^-1 ($56-60 acre ^-1) assuming dendroremediation incentives of $1.50 and $3.50 kg^-1 N, respectively.