Earth Systems and Environment (2022) 6:405–419

https://doi.org/10.1007/s41748-021-00241-6

ORIGINAL ARTICLE

Cost–Benefit Analysis of Climate Change Mitigation Measures

in the Forestry Sector of Peninsular Malaysia
Asif Raihan1 · Mohd Nizam Mohd Said1,2

Received: 18 March 2021 / Revised: 15 June 2021 / Accepted: 16 June 2021 / Published online: 23 June 2021
© King Abdulaziz University and Springer Nature Switzerland AG 2021

Abstract
Greenhouse gases (GHGs) have been increasingly dominated by carbon dioxide ­(CO2) with its negative effects on the global
climatic system. Malaysia has forest land around 67% of the total land area which helps to mitigate climate change by absorb-
ing atmospheric ­CO2 and enhancing the national carbon sink. However, there is a lack of study on the cost-effectiveness of
potential mitigation measures in the forestry sector of Malaysia (e.g., forest conservation, afforestation, natural regenera-
tion). Therefore, this article attempts to do a cost–benefit analysis (CBA) of the potential mitigation measures for 25, 50 and
75 years by considering the discount rate of 0% and 3%. The costs considered for the CBA include the establishment and
maintenance cost of the mitigation measures. The CBA considered benefits associated with carbon sequestration, timber
production, forest revenue, biodiversity, and other forest ecosystem services. A meta-analysis has been conducted to evalu-
ate the carbon density in Malaysian forests, which has been used to assess the forest carbon sequestrated by each mitigation
measures. This study found that the forestry sector of Malaysia has a huge potential to mitigate climate change whereas
natural regeneration is the most cost-effective mitigation measure followed by forest conservation and afforestation. The
outcome of this research would be useful for forest management planning to mitigate climate change in a cost-effective way.
This study could encourage other countries to identify and implement the most cost-effective measure to mitigate climate
change by achieving maximum carbon sink with minimum cost.

Keywords Climate change · Forest · Mitigation measures · CBA · Malaysia

1 Introduction sequestration), and it has become a key alternative for the

The earth’s systems are exhausting due to environmental
degradation and climate change which have become a criti-
cal issue because of GHGs emissions dominated by C ­ O2
(Abutaleb et al. 2018; Almazroui et al. 2019; Chamling
and Bera 2020; Khalil et al. 2019; Were et al. 2019). For-
ests play an important role in climate change mitigation by
sequestering carbon through biomass production (Udaya-
kumara and Gunawardena 2018; Yirga et al. 2019). Forest
carbon sequestration is more cost-effective than many other
means of emissions reduction (e.g., marine and geological
* Asif Raihan
asifraihan666@gmail.com
1
Institute of Climate Change (IPI), Universiti Kebangsaan
Malaysia, 43600 UKM Bangi, Selangor, Malaysia
2
School of Environmental and Natural Resource Sciences,
Faculty of Science and Technology, Universiti Kebangsaan
Malaysia, 43600 UKM Bangi, Selangor, Malaysia
international community to reduce ­CO2 emissions (IPCC
2014). However, environmental degradation in Malaysia is
increasing due to urbanization, agricultural expansion, and
oil-palm plantation by cutting and burning of forests which
upsurges the atmospheric concentration of ­CO2 (Begum
et al. 2020; Jaafar et al. 2020). Global forests are a net source
of 1.8 Gt carbon per year due to deforestation and forest
degradation, of which 20% can be recognized as tropical
deforestation (Matthew et al. 2018). Forests perform as both
sources and sinks of carbon through which they have a vital
impact on the global climatic system (Matthew et al. 2018).
Jackson and Baker (2010) reported that reducing deforesta-
tion and forest degradation could cut global deforestation
rates in half by 2030, preserving 1.5–3.0 billion metric tons
of ­CO2 emissions yearly.
Malaysia has forest land around 67% of total land area
(World Bank 2021) which has an enormous potential to
reduce GHG emissions along with enhancing national
carbon sink if appropriate policies are formulated with

13
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406
adequate investments. The national GHG inventory in
Malaysia for 2014 showed that Land Use, Land-Use
Change and Forestry (LULUCF) sector helped to remove
almost 84% of total national GHG emission from all
the sectors, which indicates a huge potential of forestry
sector to set up Malaysia as an emission free country
(MNRE 2018). Reversing forest losses through restora-
tion, improvement, and conservation is a critical goal for
climate change mitigation which is an important issue
in the current climate discussion (Matthew et al. 2018).
Slowing deforestation and forest degradation by imple-
menting cost-effective mitigation measures in the forestry
sector can reduce global carbon emissions and prevent
climate change with the lowest cost (Raihan et al. 2018).
Forestry-based mitigation measures would play a multi-
functional role that includes carbon sequestration, bio-
diversity conservation, improvement of ecosystem, and
yields of goods and services to the community (Murthy
and Prasad 2018). However, the range of potential mitiga-
tion measures in the forestry sector is quite wide. Accord-
ing to Raihan et al. (2018), climate change mitigation
measures in the forestry sector of Malaysia are forest
conservation, afforestation, reforestation, sustainable for-
est management, urban forestry, wood-based bioenergy,
enhanced natural regeneration, agroforestry, and Reduc-
ing emissions from deforestation and forest degradation
(REDD) initiatives.
However, there is a lack of study on the cost-effective-
ness of potential mitigation measures in the forestry sec-
tor of Malaysia. A very few economic studies on climate
change in Malaysia have focused on the estimation of the
cost-effectiveness of forestry-based mitigation measures.
Numerous studies and reports worldwide have estimated
the cost-effectiveness of forestry-based mitigation meas-
ures to address climate change mitigation (Austin et al.
2020). The economic analysis of costs and benefits of the
mitigation measures would play an important role in the
decision-making for the sustainable management of for-
ests while mitigating climate change. Cost–benefit analy-
sis (CBA) helps to choose the most cost-effective meas-
ure by comparing the costs and benefits of implementing
each of the mitigation measures, which ultimately lead
to climate change mitigation through maximum carbon
sequestration with minimum cost. Future projection from
the CBA is helpful to forecast the additional carbon stock
which might be created, and the emissions reduction
which might be achieved through the mitigation activi-
ties. Afforestation, forest conservation and natural regen-
eration are the most practiced cost-effective mitigation
measures in the forestry sector all over the world (IPCC
2014). Thus, this study aims to do a cost–benefit analysis
of afforestation, forest conservation and natural regenera-
tion in Malaysia.
13
A. Raihan, M. N. M. Said
2 Materials and Methods
2.1 Objectives of the Study
This research intends to estimate the net benefit and ben-
efit–cost ratio of the potential mitigation measures in the
forestry sector of Peninsular Malaysia by applying CBA for
25, 50 and 75 years. For estimating the cost-effectiveness of
afforestation, forest conservation and natural regeneration, this
study accounts for all the dominant costs and benefits of each
mitigation measure. The costs and benefits are calculated in
Malaysian Ringgit (RM) based on the price in December 2018
(USD1 = RM4.20) as the data regarding the forest area, costs,
and benefits are available until 2018.
2.2 Data Regarding Costs and Benefits
This article employed CBA to suggest the most cost-effec-
tive forestry option for climate change mitigation. The CBA
focuses on the incremental benefits and costs of climate change
mitigation scenario. Therefore, the benefits from forest carbon
sequestration considered as the direct benefit. This study uti-
lized a meta-analysis on forest carbon per hectare in Malaysian
forests to estimate the average forest carbon density. Further-
more, the economic benefit of forest carbon is evaluated by
multiplying the average carbon density (181.22 t ­ha−1) with
the estimated price for one ton of carbon stored in Malaysian
forest biomass. In addition, the CBA considers other benefits
from forest revenue collection, timber production, biodiversity
and other forest ecosystem services as the indirect benefits.
Data regarding forest revenue collection and timber produc-
tion are collected from the Forestry department, Peninsular
Malaysia (FDPM) annual report 2018. However, this analy-
sis used the benefit transfer method to assess the economic
value of biodiversity and other forest ecosystem services from
Carrasco et al. (2014) by converting the economic value into
Malaysian Ringgit. The costs considered for CBA include the
establishment and maintenance of mitigation measures for car-
bon sequestration, for example: land preparation and planting
cost, maintenance cost. Data regarding the cost for establishing
forest plantation (land preparation, seedling and tree plant-
ing cost) are collected from Official Portal Malaysian Timber
Industry Board (MTIB). Furthermore, the data regarding the
maintenance cost (operating and development expenditure)
are collected from the FDPM annual report 2018. Figure 1
presents the flow chart of the CBA procedure.
2.3 Meta‑analysis on Forest Carbon Density
in Malaysia
This study estimated the average forest carbon density in
Malaysia by utilizing a meta-analysis consists of a set of
21 primary studies conducted between the years 2001 and
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Cost–Benefit Analysis of Climate Change Mitigation Measures in the Forestry Sector of Peninsular…
Fig. 1  Flow chart of the CBA procedure
2018. Stata 16 software has been used to conduct the meta-
analysis. The primary studies were selected based on their
results on forest carbon stock per hectare in Malaysian for-
ests. The meta-analysis did not consider primary studies
published after 2018 as the reference year for the present
study is 2018. Table 1 presents the sample size and average
forest carbon density in Malaysia estimated by the primary
studies. Effect sizes for each of these studies are estimated
by the results from average forest carbon per hectare and
the standard error. However, a random-effects meta-analysis
model assumes that the study effect sizes are different, and
the primary studies represent a random sample from a larger
area (hence the term random effects). Therefore, the present
study used random-effects model for meta-analysis on forest
carbon per hectare in Malaysia where the primary studies
represent a random sample plot from a larger area of for-
est. The defining feature of the random-effects model is that
there is a distribution of true effect sizes of forest carbon
stock per hectare, and the present study aims to estimate the
mean of this distribution. Different effect sizes underlying
Published in partnership with CECCR at King Abdulaziz University
407
different studies due to the size of the sample plot, method-
ology, biomass type or the type of forests. Since each study
provides information about different effect sizes, the present
study wants to be sure that all these effect sizes are repre-
sented in the summary estimate. Data from the individual
primary studies are summarized, pooled, and calculated to
provide an overall estimate of average forest carbon density
in Malaysia. The result from the meta-analysis was used to
estimate the quantity of the forest carbon sequestrated by
each mitigation measures.
2.4 Estimated Carbon Price
The atmospheric ­CO2 removal price varies widely and may
range from USD3.00 to USD40.00 per ton C ­ O2 equiva-
lent ­(CO2eq) (MNRE 2011). Atmospheric ­CO2 removal
prices for forestry-based activities in Malaysia ranges
from USD2.90 to USD7.30, where a conservative price of
USD5.00 (RM21) per ton ­CO2eq is assumed by Malaysia’s
report of second national communication to the UNFCCC
13
408 A. Raihan, M. N. M. Said

Table 1  Sample size and Authors Sample size (ha) Average forest Standard deviation Standard error
average forest carbon density carbon (tonne/
in Malaysia estimated by the hectare)
previous studies
Adachi et al. (2011) 300 201.5 58.5 3.38
Adam and Jusoh (2018) 0.9 146.1 32.8 34.58
DiRocco (2012) 3.84 208.8 1.04 0.53
Hazandy et al. (2015) 2 154.78 18.38 12.99
Hector et al. (2011) 2 185.85 69.05 48.83
Hikmat (2005) 6 233.64 63.42 25.89
Hong et al. (2017) 0.18 198.81 47.41 111.75
Ismariah and Fadli (2007) 0.6 107.67 3.5 4.52
Majid and Nurudin (2015) 1 225.55 11.28 11.28
Mashor et al. (2017) 4 260.08 133.26 66.47
Mat-Salleh et al. (2003) 0.75 234.2 11.71 13.52
Matthew et al. (2018) 0.6 281 14.05 18.14
Neto et al. (2012) 0.3 178.67 59 107.72
Norashikin et al. (2015) 1.5 157.64 11.12 9.08
Norhayati and Latiff (2001) 1 115.56 5.78 5.78
Omar and Misman (2018) 8.39 117 0.78 0.27
Omar et al. (2011) 7.5 96.8 135.53 49.49
Omar et al. (2015) 0.79 220.54 46.08 52.00
Saatchi et al. (2011) 100 180 16 1.6
Saner et al. (2012) 2 167.9 3.8 2.69
Zani et al. (2018) 0.8 219.69 63.93 71.47

(MNRE 2011). The price of per unit carbon stored in for-
est biomass was estimated by using the following equation
(IPCC 2010),
PCO2
PC =
0.273
Where, PC is the price of one-ton carbon stored in forest
biomass and ­PCO2 is the price for removing one ton of ­CO2
equivalent ­(CO2eq).
According to the price ratio between C ­ O2eq and bio-
mass carbon specified by IPCC (2010), 0.273 ton of car-
bon would be stored in tree biomass with RM21 (USD5) if
trees sequester one ton of atmospheric C
­ O2 (MNRE 2011).
Hereafter, the price for one ton of carbon stored in forest
biomass would be approximately RM77 (21/0.273 = 76.92)
or USD18.33 (price in December 2018).
2.5 Benefit Transfer Method
The economic value of biodiversity and other forest eco-
system services are collected and used by using the benefit
transfer method which is the process of taking study results
from one situation and extrapolating them to other similar
situations (Richardson et al. 2015). Benefit transfer is used
mostly when time, budgetary, data-availability and technical
or other constraints prevent the use of primary data in per-
forming estimates (mainly, it is quicker and cheaper than
primary studies). However, this study used the economic
value of biodiversity and other forest ecosystem services
from Carrasco et al. (2014) who used a meta-analytic model
to generate a raster map of economic values across tropi-
cal forests globally. The estimated values have a mean of
USD1312 (RM5510.40) per hectare per year. The present
study used this economic value for the CBA as this value is
suitable to use due to Malaysian forests are tropical forest
as like the meta-analytic model across tropical forests by
Carrasco et al. (2014).
2.6 Net Present Value (NPV) of the Costs
and Benefits
The cost–benefit analysis is based on the calculation of
the NPV by considering the discount rate. All the values
are pooled to the price in 2018. The discount rate used for
CBA of forest resources ranging mostly between 0 and
7% (Sauter and Mußhoff, 2018). According to the Central
Bank of Malaysia (2011), the discount rate in Malaysia is
3%. Treasury (2003) suggests 0% discount rates for CBA
of forestry case studies when it considered for less than
30 years and 3% discount rate when the CBA considered a
period of 31–75 years. However, Average harvesting cycle

13 Published in partnership with CECCR at King Abdulaziz University

Cost–Benefit Analysis of Climate Change Mitigation Measures in the Forestry Sector of Peninsular…
(rotation period) for tropical forests like Malaysian forests
is 25 years. Therefore, this CBA is based on the calcula-
tion of NPV by considering the discount rate of 0% and
3% for the one-harvesting cycle (25 years), two-harvesting
cycle (50 years) and three-harvesting cycle (75 years). The
CBA does not consider years more than 75 years due to
the inflation of money and the dilemma of a higher dis-
count rate if the CBA considered more than 75 years. The
following equation represents the cost of implementing
mitigation measures (Cubbage et al. 2013).
∑T Ct
NPVC =
t=0 (1 + i)t
where “i” is the discount rate and Ct is the variable cost
represents the maintenance cost at the time “t” which con-
siders for 25, 50 and 75 years to calculate the NPV of costs
and benefits of each mitigation measure for different period
of time.
However, to implement an afforestation program there
is a fixed cost, for example, the cost for land preparation
and tree planting beside the maintenance cost. Thus, the
net present value of cost (NPVC) for afforestation is calcu-
lated by using the following equation.
∑T Ct
NPVC = Cfx +
t=0 (1 + i)t
where, Cfx is the fixed cost which remains constant for a
rotation period of trees such as land preparation and tree
planting cost for the afforestation program.
The NPV of benefits by each mitigation measure is esti-
mated by considering the benefits from the carbon seques-
tration, timber production, forest revenue, biodiversity, and
other forest ecosystem services. The following equation
represents the NPV of the benefits by natural regeneration.
∑T Bcs + Btp + Bbdes
NPVB =
t=0 (1 + i)t
where, “i” is the discount rate. Bcs, Btp and Bfr represent
the variable benefits of carbon sequestration value, tim-
ber production value and forest revenue collection respec-
tively. In addition, Bbdes represents the economic value of
biodiversity and other forest ecosystem services.
Afforested land is very poor in species biodiversity. In
addition, wildlife habitats are not established permanently
in the afforested land due to harvesting by clear-felling.
Published in partnership with CECCR at King Abdulaziz University
409
Soil erosion increase and other forest ecosystem services
disappear when the afforested land are harvested by clear-
felling. Therefore, the economic value of biodiversity and
other forest ecosystem services are not considered to esti-
mate the net benefits of afforestation. The following equa-
tion represents the NPV of the benefits by afforestation.
Bcs + Btp + Bfr
∑T
NPVB =
t=0 (1 + i)t
The benefits from afforestation and natural regeneration
are variable benefits as the benefits start rising from zero as
the trees grow from seedlings or seeds and the benefits keep
increasing until the harvesting at rotation age. However,
some of the benefits don’t start from zero at the beginning of
implementing forest conservation. When a forest is declared
as a protected forest or conserved forest, it is already a
mature forest with most of the trees already reached their
rotation age. As harvesting is not permitted in a conserved
forest, trees remain over the rotation age. After the rotation
age of trees (usually 25 years for tropical forests), there is
a very slow rate of increasing carbon and timber produc-
tion, which is almost negligible (IPCC 2014; Irteza et al.
2021). Therefore, net present benefits calculation for forest
conservation considered biomass carbon and timber produc-
tion value as fixed benefits with the value of a mature forest.
The benefits from forest revenue along with the biodiversity
and other forest ecosystem services are considered as the
variable benefits which increase over the years. The follow-
ing equation represents the NPV of the benefits from forest
conservation.
∑T Btp + Bbdes
NPVB = Bcs + Btp +
t=0 (1 + i)t
2.7 Net Benefits of the Mitigation Measures
Net benefits of the mitigation measures are calculated by
subtracting the total cost from the total benefits of each miti-
gation measure. The net benefits for 25, 50 and 75 years are
estimated by using the following equations derived from
Cubbage et al. (2013) who evaluated cost–benefit analysis
for community forestry projects in Latin America. Further-
more, a recent study by Ma et al. (2020) utilized the similar
equation to evaluate cost–benefit analysis of China’s natural
forest conservation program.
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410 A. Raihan, M. N. M. Said

∑T Bfr ∑T Ct
Net Benefit of forest conservation = NPVB − NPVC = Bfcs + Btp + t
−
t=0 (1 + i) t=0 (1 + i)t

∑T Bcs + Btp + Bfr ∑T Ct

Net Benefit of afforestation = NPVB − NPVC = t
− Cfx
t=0 (1 + i) t=0 (1 + i)t

∑T Bcs + Btp + Bfr ∑T Ct

Net Benefit of natural regeneration = NPVB − NPVC = t
−
t=0 (1 + i) t=0 (1 + i)t

about study heterogeneity and the significance of the over-

2.8 Benefit–Cost Ratio of the Mitigation Measures
all effect size are also presented in a forest plot. This plot
provides a convenient way to visually compare the study
Benefit–cost ratio by implementing forest conservation,
effect sizes. The forest plot of the meta-analysis outcome is
afforestation and natural regeneration for 25, 50 and 75 years
presented in Fig. 2. The column on the left side of the forest
are calculated by using the following equation (Cubbage
plot contains the list of studies represented by the first author
et al. 2013).
for each individual primary study along with the year of
NPVB publication. The blue square boxes situated in line represent
Benefit - cost ratio =
NPVC the outcome value and the size of the individual studies. The
bigger the box, the larger the studied sample plot for estimat-
ing the forest carbon and representing a more reliable study.
2.9 Cost, Benefit and Net Benefit per Hectare Forest The horizontal lines through the boxes are representing the
Area 95% confidence intervals of the study result, with each end
of the line represents the boundaries of the confidence inter-
Cost, benefit and net benefit from each mitigation measure val. The longer the lines, the wider the confidence intervals
for 25, 50 and 75 years are estimated from subtracting the (CI), the less reliable the study results.
total cost, total benefit and net benefit by the total land area The green diamond at the bottom of the forest plot repre-
for each mitigation measure using the following equations, sents the overall outcome when all the individual studies are
NPVC combined and averaged. The axis at the bottom of the graph
Cost per hectare = is showing the range of forest carbon stock per hectare. The
A
center of the diamond represents the pooled estimate of aver-
age forest carbon density and the horizontal points of the
NPVB
Benefit per hectare = diamond represent the overall CI. The outcome of the meta-
A analysis indicates the carbon density in Malaysian forests is
181.22 t ­ha−1 with a range of 157.51 to 204.92 t h­ a−1. This
NPVB − NPVC study used the meta-analysis outcome of average forest car-
Net benefit per hectare =
A bon density 181.22 t h­ a−1 to estimate carbon sequestrated by
Where, ‘A’ is the total forested land in hectares for each implementing the mitigation measures. The I2 at the bottom
mitigation measure. of the forest plot indicates the level of heterogeneity which
refers to the variation in study outcomes between studies.
The high value of heterogeneity (I2 = 99.87%) validates the
3 Results and Discussion appropriateness of choosing Random-effects meta-analysis
model as the low value of heterogeneity suggests that the
3.1 Meta‑analysis on Forest Carbon Density fixed effects model might be appropriate. The overall effect
in Malaysia P value is 0.00 which indicates a very significant result.
However, the meta-analysis contour-enhanced funnel plot
The results of the meta-analysis are summarized on a forest is commonly used to explore whether the meta-analysis out-
plot with the study-specific effect sizes and their correspond- come is publication bias on positive results rather than non-
ing confidence intervals along with the combined estimate of significant or negative results. Meta-analysis funnel plot is
the effect size and its confidence interval. The information a scatterplot where effect size and standard error are the two

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Cost–Benefit Analysis of Climate Change Mitigation Measures in the Forestry Sector of Peninsular… 411

Fig. 2  Meta-analysis forest plot

on average forest carbon density
studies in Malaysia

axes of a funnel plot. The studies with larger sample size or

most precision are the dots or points located at the top of the
graph and the studies with decreasing sample size or less
precision (larger standard error) scatter towards the bottom
of the plot. Contour-enhanced funnel plot displays the areas
of statistical significance on a funnel plot. There are contour
lines in a funnel plot indicating conventional milestones in
levels of statistical significance (e.g., < 0.01, < 0.05, < 0.1).
This contour overlay aids the interpretation of the funnel
plot. For example, if the primary studies appear to be miss-
ing in the areas of statistical non-significance, it increases
the probability that the asymmetry is due to publication bias.
Conversely, missing studies in the areas of statistical signifi-
cance suggests that the observed asymmetry is more likely
to be due to factors other than publication bias based on Fig. 3  Meta-analysis contour-enhanced funnel plot of forest carbon
statistical significance (e.g., variable study quality). density studies in Malaysia
Nevertheless, by combining the results from primary
studies, a contour-enhanced funnel plot provides a total over-
all estimate which increase the precision. It means that a sig- for the studies in light-gray region. In addition, the p values
nificant effect may be seen overall that was not seen in any would be between 0.05 and 0.1 for the studies in the darker-
of the individual studies. Figure 3 presents the meta-analysis gray region. Finally, the p values would be larger than 0.1
contour-enhanced funnel plot to check the publication bias. or 10% significance level for the studies in the darkest-gray
For the studies in the white region, the null hypothesis of region. The contour-enhanced funnel plot clearly shows that
no effect can be rejected at the 1% significance level which almost all the large studies (located at the top of the graph)
means the significance tests for these studies have p values report a statistically significant result, favoring the treatment.
less than 0.01. The p values would be between 0.01 and 0.05 Moreover, three small studies (located at the bottom of the

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412 A. Raihan, M. N. M. Said

graph) at the 5% significance level in the contour-enhanced
funnel plot indicates that the meta-analysis outcome is not
publication bias on positive results.
3.2 Cost–Benefit Analysis of Forest Conservation
The cost, benefit and net benefit from forest conservation
in Peninsular Malaysia for the reference year (present year)
2018 and if implemented for the next 25, 50 and 75 years
at discounting rate of 0% and 3% are presented in Table 2.
The cost and benefit per hectare in the year 2018 are RM29
(USD7) and RM5510 (USD1,312) with net benefit RM5482
(USD1305). The cost and benefit per hectare for 25 years
at a discounting rate of 0% are RM722 (USD172) and
RM228,946 (USD54,511) with net benefit of RM228,224
(USD54,339). In addition, by considering the discount
rate of 3% cost and benefit per hectare for 25 years are
RM24,058 (USD5728) and RM4,683,186 (USD1,115,044)
with net benefit RM4,659,128 (USD1,109,316). Implement-
ing forest conservation for 50 years at discounting rate of
0% shows cost and benefit per hectare RM1443 (USD344)
and RM366,706 (USD87,311) with net benefit RM365,263
(USD86,967). By considering the discount rate of 3%, forest
conservation for 50 years shows cost and benefit per hectare
RM48,116 (USD11,456) and RM9,275,186 (USD2,208,378)
with net benefit RM9,227,070 (USD2,196,921). Finally,
the establishment of forest conservation for 75 years shows
the cost and benefit RM2165 (USD515) and RM504,466
(USD120,111) per hectare with the net benefit RM502,301
(USD119,595) at a discounting rate of 0%. In addition,
forest conservation for 75 years at discounting rate of 3%
shows the cost and benefit RM72,175 (USD17,185) and
RM13,867,186 (USD3,301,711) per hectare with net benefit
RM13,795,011 (USD3,284,526).
Deforestation and forest degradation cause climate change
and loss of biodiversity that could be avoided by forest con-
servation with low maintenance costs for carbon sequestra-
tion and biodiversity conservation. Forest conservation is
one of the cost-effective climate change mitigation measures
all over the world (Raihan et al. 2018) as there is no other
cost except the maintenance cost. However, the benefits from
forest conservation is too much higher compare to the cost
when it includes the economic value of non-tangible ben-
efits from carbon sequestration, biodiversity and other forest
ecosystem services. This study estimates the cost of forest
conservation in Peninsular Malaysia is RM29 (USD7) per
hectare per year which is supported by Oestreicher et al.
(2009) who reported forest conservation cost USD7.1 per
hectare per year in Panama. Sathaye et al. (2001) reported
that forest conservation cost range USD5-10 per hectare in
Brazil, China, India, Indonesia, Mexico, the Philippines and
Tanzania. Rai et al. (2017) estimated forest conservation cost
ranges from USD6.78 to USD31.56 per hectare per year.
Ma et al. (2020) reported that cost of forest conservation
in China varies from USD63 to USD1649 per hectare per
year whereas the forest conservation benefit ranges from
USD1570 to USD13,033 per hectare per year. Malaysian
forests are rich in biodiversity where strong forest conser-
vation policies are needed to conserve biodiversity through
reducing deforestation and forest degradation. Forest con-
servation by involving the local community is an innovative
way of maintaining forest conservation while sustaining the
livelihood for the local community. Moreover, forestry sec-
tor of Malaysia has a huge potential for tourism attraction
and promoting forest conservation through ecotourism could
increase the national economy.
3.3 Cost–Benefit Analysis of Afforestation
Afforestation refers to convert non-forest land to forest. In
addition to timber production, afforestation provides many
other forest ecosystem functions such as carbon sequestra-
tion (Nijnik et al. 2012). The cost and benefit per hectare
afforested land in the reference year (present year) 2018
are RM3037 (USD723) and RM3,320 (USD790) with net
benefit RM283 (USD67). The cost and benefit per hectare

Table 2  Costs and benefits of forest conservation

Years Total cost Cost per hectare Total benefit (Mil- Benefit per hec- Total net benefit Net benefit per
(Million RM) (RM) lion RM) tare (RM) (Million RM) hectare (RM)

2018 26 29 5045 5510 5018 5482

NPV at discounting rate of 0%
25 years 661 722 209,606 228,946 208,945 228,224
50 years 1322 1443 335,729 366,706 334,407 365,263
75 years 1982 2165 461,851 504,466 459,869 502,301
NPV at discounting rate of 3%
25 years 22,026 24,058 4,287,574 4,683,186 4,265,548 4,659,128
50 years 44,052 48,116 8,491,665 9,275,186 8,447,613 9,227,070
75 years 66,078 72,175 12,695,755 13,867,186 12,629,678 13,795,011

13 Published in partnership with CECCR at King Abdulaziz University

Cost–Benefit Analysis of Climate Change Mitigation Measures in the Forestry Sector of Peninsular…
after 25 years of afforestation at a discount rate of 0% are
RM3,918 (USD933) and RM83,005 (USD19,763) with net
benefit RM79,087 (USD18,830). The cost and benefit per
hectare for 25 years at discount rate of 3% are RM33,600
(USD8,000) and RM2,766,837 (USD658,771) with net ben-
efit RM2,733,236 (USD650,770). Afforestation for 50 years
at discount rate of 0% shows cost and benefit per hectare
RM7836 (USD1,866) and RM166,010 (USD39,526) with
net benefit RM158,174 (USD37,660). The CBA for 50 years
at discount rate of 3% shows cost and benefit per hectare
RM67,201 (USD16,000) and RM2,849,842 (USD678,534)
with net benefit RM2,782,641 (USD662,534). Continuous
forest plantation practiced for 75 years shows the cost and
benefit per hectare RM11,754 (USD2,799) and RM249,015
(USD59,289) where the net benefit is RM237,261
(USD56,491) at discount rate of 0%. In addition, imple-
menting afforestation for 75 years at discount rate of 3%
shows the cost and benefit RM100,801 (USD24,000) and
RM2,932,847 (USD698,297) per hectare with net benefit
RM2,832,046 (USD674,297). The cost, benefit and net ben-
efit by afforestation in the year 2018 and if implemented for
the next 25, 50 and 75 years at discounting rate of 0% and
3% are presented in Table 3. The benefits from afforestation
are much lower compare to forest conservation as it does not
include the economic value of biodiversity and other forest
ecosystem services.
However, the cost-effectiveness of afforestation varies
from region to region (Nijnik et al. 2013). Tree planta-
tion cost is cheaper and tree growth is faster in the tropical
developing countries (Raihan et al. 2019). Afforestation cost
is relatively uniform and stable over time and reflects the
overall income levels in the country (Sathaye et al. 2001).
According to the Malaysian Timber Industry Board (MTIB),
the average cost for land preparation, seedling and planting
costs are RM1000 (USD238) for each activity which make
the afforestation cost around RM3,000 (USD714) per hec-
tare in Malaysia. The planting cost per hectare in Malaysia
(USD238) is similar to the planting cost in other developing
Table 3  Costs and benefits of afforestation
Years Total cost Cost per hectare Total benefit (Mil-
(Million RM) (RM) lion RM)
2018 351 3037 383
NPV at discounting rate of 0%
25 years 931 3918 19,717
50 years 1861 7836 39,434
75 years 2792 11,754 59,151
NPV at discounting rate of 3%
25 years 7981 33,600 657,231
50 years 15,963 67,201 676,948
75 years 23,944 100,801 696,665
Published in partnership with CECCR at King Abdulaziz University
413
countries. Sathaye et al. (2001) reported that afforestation
costs tend to be higher in Mexico (USD400 per hectare), and
lower in India, Philippines, China and Tanzania (USD150
to USD300 per hectare). Niskanen (1997) reported that
plantation establishment cost per hectare in Thailand varies
between USD780 and USD890 which is equivalent to the
afforestation cost by present study (USD714 per hectare)
as Thailand is a neighbouring country of Malaysia. Nijnik
et al. (2012) reported the tree-planting and maintenance
cost per hectare in Ukraine is €100–200 (USD121–243) and
€12.5–30 (USD15–36.5) respectively, which are also iden-
tical to the tree planting cost (USD238) and maintenance
cost (USD7) by the present study. Ma et al. (2020) reported
that afforestation cost in China varies from USD518 to
USD12,248 per hectare per year where the afforestation
benefit ranges from USD1303 to USD12,578 per hectare
per year. The afforestation cost is low in Malaysia due to
good forest growing conditions and relatively low labour
cost (Raihan et al., 2018). Malaysia is suitable for affor-
estation to contribute to sustainable land management and
climate change mitigation.
3.4 Cost–Benefit Analysis of Natural Regeneration
Natural regeneration is the establishment of young trees
through natural seeding, sprouting, suckering, or layer-
ing which relies on residual seeds and plants at the site,
or dispersed from vegetation nearby (Evans et al. 2015).
Table 4 presents the cost, benefit and net benefit of natu-
rally regenerated forest in the reference year (present year)
2018 and if implemented for the next 25, 50 and 75 years
at a discounting rate of 0% and 3%. The cost and bene-
fit per hectare forest with natural regeneration in 2018 is
RM37 (USD9) and RM9158 (USD2,180) with net benefit
RM9,121 (USD2172). The cost and benefit per hectare after
25 years of natural regeneration at a discounting rate of 0%
is RM918 (USD219) and RM228,946 (USD54,511) with
net benefit RM228,028 (USD54,292). At discounting rate of
Benefit per hec- Total net benefit Net benefit per
tare (RM) (Million RM) hectare (RM)
3320 32 283
83,005 18,786 79,087
166,010 37,573 158,174
249,015 56,359 237,261
2,766,837 649,250 2,733,236
2,849,842 660,985 2,782,641
2,932,847 672,721 2,832,046
13
414 A. Raihan, M. N. M. Said

Table 4  Costs and benefits for naturally regenerated forest

Years Total cost Cost per hectare Total benefit (Mil- Benefit per hec- Total net benefit Net benefit per
(Million RM) (RM) lion RM) tare (RM) (Million RM) hectare (RM)

2018 1 37 319 9158 318 9121

NPV at discounting rate of 0%
25 years 30 918 7579 228,946 7549 228,028
50 years 61 1836 15,159 457,892 15,098 456,056
75 years 91 2754 22,738 686,838 22,647 684,084
NPV at discounting rate of 3%
25 years 1013 30,600 252,648 7,631,533 251,635 7,600,933
50 years 2026 61,201 505,295 15,263,067 503,269 15,201,866
75 years 3039 91,801 757,942 22,894,600 754,903 22,802,799

3%, The cost and benefit per hectare after 25 years would be
RM30,600 (USD7286) and RM7,631,533 (USD1,817,032)
with net benefit RM7,600,933 (USD1,809,746). Naturally
regenerated forest management for 50 years at discounting
rate of 0% shows cost and benefit per hectare RM1,836
(USD437) and RM457,892 (USD109,022) with net ben-
efit RM456,056 (USD108,585). In addition, natural regen-
eration for 50 years at discounting rate of 3%, shows
cost and benefit per hectare RM61,201 (USD14,527)
and RM15,263,067 (USD3,634,064) with net benefit
RM15,201,866 (USD3,619,492). Finally, the continuous
forest management practice by enhancing natural regenera-
tion for 75 years at a discounting rate of 0% shows the aver-
age cost and benefit RM2,754 (USD656) and RM686,838
(USD163,533) per hectare with net benefit RM684,084
(USD162,877). By considering at discounting rate of
3%, natural regeneration for 75 years shows the cost and
benefit of RM91,801 (USD21,857) and RM22,894,600
(USD5,451,095) per hectare with net benefit RM22,802,799
(USD5,429,238). The costs and benefits by considering a
discount rate of 3% are higher than the costs and benefits
estimated at the discount rate of 0% due to the variable cost
and variable benefits.
There is no establishment cost for natural regeneration as
the trees regenerated naturally from the dispersal of seeds
or from the coppice which are the new shoots growing from
the stump or roots of the harvested trees. Natural regen-
eration is comparatively cheap for large-scale reforestation
programmes and reforesting remote areas (e.g., mountainous
areas) that are difficult to access. Thus, the benefits from nat-
urally regenerated forest are much higher compare to forest
conservation and afforestation. Natural regeneration is rec-
ognized as a cost-effective forest restoration method that can
restore biodiversity and ecosystem services in areas of inter-
mediate levels of degradation, while also providing income
for rural livelihoods (Ma et al. 2014). Strassburg et al. (2016)
reported higher long-term biomass accumulation in natu-
ral regeneration which ultimately helps to increase carbon
sequestration as well as climate change mitigation.
3.5 Comparative Analysis of Cost–Benefit Analysis
of the Mitigation Measures
This study compares the cost-effectiveness of the mitigation
measures based on the net-benefit per hectare (USD) and the
benefit–cost ratio. Table 5 presents a comparison among the

Table 5  Comparison among the Years Forest conservation Afforestation Natural regeneration
mitigation measures
Discount rate Discount rate Discount rate
0% 3% 0% 3% 0% 3%

Comparison based on the net-benefit per hectare (USD)

25 years 54,339 1,109,316 18,830 650,770 54,292 1,809,746
50 years 86,967 2,196,921 37,660 662,534 108,585 3,619,492
75 years 119,595 3,284,526 56,491 674,297 162,877 5,429,238
Comparison based on the benefit–cost ratio
25 years 317 195 21 82 249 249
50 years 254 193 21 42 249 249
75 years 233 192 21 29 249 249

13 Published in partnership with CECCR at King Abdulaziz University

Cost–Benefit Analysis of Climate Change Mitigation Measures in the Forestry Sector of Peninsular… 415

cost-effectiveness of forest conservation, afforestation and
natural regeneration. By considering the discount rate of
0% for 25 years, the net benefit of forest conservation and
natural regeneration is almost three times higher than the net
benefit from afforestation while by considering the discount
rate of 3% for 25 years, the net benefit of forest conservation
is almost two times higher and natural regeneration is nearly
three times higher compare to afforestation. In addition, at
the discount rate of 0% for 50 and 75 years, the net benefit
of forest conservation is almost two times higher and natural
regeneration is nearly three times higher than the net benefit
from afforestation. Moreover, by considering the discount
rate of 3% for 50 years, forest conservation is almost three
times more beneficial and natural regeneration is nearly five
times more beneficial compare to afforestation. Furthermore,
at the discount rate of 3% for 75 years, the net benefit of
forest conservation is almost five times higher and natural
regeneration is nearly eight times higher than the net benefit
from afforestation. The outcomes of the present study are in
line with Ma et al. (2020) who reported that the net benefit
of forest conservation in China is highest while afforestation
provides the lowest net benefit.
Moreover, the benefit–cost ratio for forest conservation
shows higher at the initial stage which decreases over time as
the benefits from timber and forest carbon remain fixed. The
CBA outcomes indicate that afforestation is less cost-effec-
tive compare to both forest conservation and natural regen-
eration. The benefit–cost ratio for afforestation decreases
over the time after the first rotation (25 years) due to the loss
of carbon every time when the harvesting operation occurred
in the plantation area. The cost for planting trees each time
after harvesting to continue afforestation is another reason
behind the reduction of benefit–cost ratio over the years.
The benefit–cost ratio of implementing natural regeneration
remain constant for any duration, where the benefit–cost
ratio of forest conservation and afforestation decrease over
the years. Furthermore, compared to afforestation, natural
regeneration offers some financial advantages as the costs
associated with seed collection, nursery setting, raising,
and planting seedlings are eliminated or reduced (Belem
et al. 2017). Natural regeneration is more cost-effective
than afforestation which can benefit biodiversity conser-
vation alongside carbon sequestration. Evans et al. (2015)
found the average minimum carbon price required to make
assisted natural regeneration viable is 60% lower than what
is required to make afforestation viable (USD65.8 ­tCO2eq
compared to USD108.8 ­tCO2eq). In addition, monoculture
tree plantations like afforestation have low resilience as the
risk of susceptibility to plant disease increases due to the low
genetic diversity (Liu et al. 2018).
3.6 GHG Emissions Projection and the Potential
of Mitigation Measures in the Forestry Sector
of Malaysia
Agriculture, Forestry and Other Land Use (AFOLU), and
LULUCF sector in Malaysia helps to reduce emissions
through carbon sequestration which keeps a crucial role in
reducing the negative impacts of climate change. Based on
the data regarding GHG inventory in Malaysia from 1990
to 2016 (MNRE 2020), this study projects the GHG emis-
sions scenario and the potential of AFOLU—LULUCF
sector to mitigate climate change by reducing emissions
through carbon sequestration in Malaysia. Table 6 presents
the national GHG inventory in Malaysia along with the
future projection of total GHG emissions, carbon sink by
AFOLU—LULUCF, net total emissions (after subtract-
ing sink), and the percentage of total emission reduc-
tion by AFOLU—LULUCF sector. Table 6 shows that
AFOLU—LULUCF sector absorbs a gigantic amount of

Table 6  GHG emissions Year Total GHG Sink by AFOLU— Net total emissions Emissions reduction by
scenario and the potential of emissions LULUCF (Gg ­CO2eq) (Gg ­CO2eq) AFOLU—LULUCF (%)
AFOLU—LULUCF sector to (Gg ­CO2eq)
reduce emission through carbon
sink in Malaysia 1990 90,103 95,728 − 5624 106.24
1995 123,071 206,705 − 83,634 167.96
2000 180,749 180,945 − 197 100.11
2005 246,683 197,933 48,750 80.24
2010 279,340 234,680 44,660 84.01
2014 314,310 263,831 50,479 83.93
2016 334,635 241,345 75,488 72.12
2018 355,574 262,054 93,521 73.70
2020 377,740 282,762 94,977 74.86
2030 475,279 322,051 153,228 67.76
2040 572,819 361,340 211,479 63.08
2050 670,358 400,629 269,730 59.76

Published in partnership with CECCR at King Abdulaziz University 13

416
GHG emission which indicates a huge potential for future
climate change mitigation by implementing cost-effective
mitigation measures in the forestry sector of Malaysia.
According to IPCC (2019), all assessed modeled pathways
that limit warming to 1.5 °C or well below 2 °C require
land-based mitigation and land-use change, with most
including different combinations of reforestation, affores-
tation, reduced deforestation, and bioenergy.
Furthermore, Table 6 reveals that total GHG emissions
in 2018 for whole Malaysia is 355,574 Gg (gigagram) of
­CO2eq whereas the present study found that the forest con-
servation area in Peninsular Malaysia absorbed approxi-
mately 29,967 Gg of C ­ O2 in 2018 which is nearly 9% of the
total GHG emissions. Hence, forest conservation in Penin-
sular Malaysia indicates an enormous potential to reduce
the national GHG emissions. In addition, this study found
that forest plantations in Peninsular Malaysia sequestrated
approximately 3065 Gg of C ­ O2 in 2018 which is 1% of the
total GHG emissions in 2018. Thus, GHG emissions reduc-
tion potential in Malaysia can be increased by encouraging
national and private afforestation program. Moreover, natu-
rally regenerated forests in Peninsular Malaysia absorbed
approximately 925 kt of C ­ O2 in 2018. Emission reduction
contribution by naturally regenerated forests is lower than
forest conservation and afforestation due to the smaller area
of naturally regenerated forests in Peninsular Malaysia.
Nevertheless, the present study found natural regenera-
tion more beneficial over forest conservation as there is an
annual increment of economic value from timber produc-
tion and biomass carbon with the same low maintenance
cost. Hereafter, natural regeneration is the most cost-effec-
tive mitigation measure considering the long-term benefit.
Natural regeneration of forests is widely considered to be
the most cost-effective approach for carbon sequestration,
recovering biodiversity, ecological processes, and ecosystem
services, particularly in tropical regions. Thus, this study
suggests reducing emissions by enhancing natural regenera-
tion in Peninsular Malaysia. Naturally regenerated forests in
Malaysia are currently being managed through a selective
management system with minimum maintenance cost and
maximum economic benefits. Therefore, natural regenera-
tion could be a cost-effective method for sustainable forest
management in Malaysia.
However, Austin et al (2020) projected that avoiding
deforestation through forest protection and conservation
results globally in average annual mitigation of 0.3–1.8
­GtCO2 ­yr−1 over 2025–2055, while afforestation and refor-
estation results in 0.1–2.6 ­GtCO2 ­yr−1 and forest manage-
ment including changes in harvest rotations (natural regen-
eration) results in 0.2–1.6 ­GtCO2 ­yr−1. However, managing
forests to increase carbon sequestration or reduce carbon
emissions have been considered effective ways to tackle cli-
mate change in many countries and regions (Xu et al. 2018).
13
A. Raihan, M. N. M. Said
Malaysia has a huge scope to strengthen the climate change
mitigation potential through the vast implementation of for-
estry-based mitigation measures since Ismariah and Fadli
(2007) reported that the rate of forest carbon sequestration in
Malaysia is relatively high due to the rapid growth of plants.
Moreover, climate change mitigation actions are already
being mainstreamed into Malaysian national development to
realize adaptation and mitigation co-benefits from all sec-
tors of the economy. Enhanced efforts have been taken by
Malaysia to mainstream mitigation actions into its develop-
ment through the development and implementation of poli-
cies, plans and programs that have mitigation co-benefits
which at the same time meets the development needs of the
country. For example, one of the main thrusts in the Elev-
enth Malaysia Plan (2016–2020) is ‘Pursuing Green Growth
for Sustainability and Resilience’. Along with other tropical
countries, Malaysia has become the focus of climate change
mitigation for developing countries in REDD + (UNFCCC
2009). Furthermore, Malaysia has benefited from invest-
ments in GHG emissions reduction projects through par-
ticipation in the Clean Development Mechanism (CDM)
under the Kyoto Protocol. Following the ratification of the
Kyoto Protocol, Malaysia established a national strategy
on CDM which considered both the short-term and long-
term perspectives of the country’s position about climate
change mitigation measures. Through participation in the
CDM Malaysia benefited from investments in GHG emis-
sion reduction projects which have contributed towards the
overall improvement of the environment in line with its
sustainable development goals. Up to the end of the first
Kyoto commitment period (­ 31st December 2012), the CDM
projects in Malaysia yielded 23.95 million tons ­CO2eq emis-
sions reduction (MNRE 2018).
Furthermore, Malaysia is consistently maintaining more
than 50% of its landmass as forest which includes perma-
nent reserved forests, state land forests and protected areas
(MNRE2018). Malaysia has launched Peninsular Malaysia
Forestry Policy 2020 on the International Day of Forests
2021. It is an inclusive policy that considers the interests of
Peninsular Malaysia towards achieving sustainable devel-
opment as well as sustainable forest management. Based
on the Forestry Policy 2020, special focus will be given to
the greening Malaysia agenda to enhance forest conserva-
tion through tree planting, rehabilitation, and restoration of
degraded forest areas, in collaboration with state govern-
ments under the 12th Malaysia Plan. Malaysian forestry
policy 2020 also encourages private investment in forest
development through the establishment of private forest
plantation area. Actual implementing of National Forestry
Policy indicates a huge potential of the forestry sector to
make Malaysia an emission-free country by increasing
the national carbon sink through forestry-based mitigation
measures.
Published in partnership with CECCR at King Abdulaziz University
Cost–Benefit Analysis of Climate Change Mitigation Measures in the Forestry Sector of Peninsular…
4 Conclusion
This study estimates the cost-effectiveness of three major
climate change mitigation measures (forest conservation,
afforestation, and natural regeneration) in the forestry sec-
tor of Malaysia through a cost–benefit analysis. The result
of this study indicates that forestry sector of Malaysia has
a huge potential to mitigate climate change whereas natural
regeneration is the most cost-effective mitigation measure
followed by forest conservation and afforestation. GHG
emissions and the negative impacts of global climate change
can be reduced by avoiding deforestation through forest
conservation, increasing forest carbon sink by afforestation,
and sustainable management of forest by enhancing natu-
ral regeneration. Malaysia has vast forest land which can
be declare as forest conservation area to enhance national
carbon sink. Climate change mitigation potential of Malay-
sia can be increased by the creating more afforestation pro-
gram. The substantially lower costs associated with natural
regeneration mean that it is a key strategy for achieving
national emission reduction and climate change mitigation
targets in Malaysia. The outcome from this analysis could
be helpful for the policy makers to design cost-effective
forest management policies. Therefore, this research could
play a substantial role by providing the suitable informa-
tion and recommendations to make decisions for reducing
carbon emission and increasing climate change mitigation
potential in forestry sector of Malaysia. This article provides
novel insights into climate change mitigation with the imple-
mentation of cost-effective measure through the cost–benefit
analysis which could encourage other countries to mitigate
climate change while achieving maximum carbon sink with
minimum cost by identifying and implementing the most
cost-effective measure. Furthermore, this article could gen-
erate ideas and methodological guidelines for other countries
regarding economic evaluation of different forest services,
forest management practices, carbon emission reduction pro-
jects, community forestry projects, ecological restoration,
and various mitigation and adaptation strategies to reduce
the climate change impacts. However, this study focused
on climate change mitigation through the major forestry
practices in Malaysia whereas this article did not discuss
the climate change impacts on the forests, especially how
temperature and rainfall affect the forest trees over the years.
Future studies can explore the climate change impacts and
adaptation strategies in the forestry sector of Malaysia.
Author contributions AR has made substantial contributions in con-
ceptualization, methodology, formal analysis, data curation, writing-
original draft preparation, and visualization. MNMS contributed to
validation, visualization, and supervision. Authors have read and
approved the final manuscript.
Published in partnership with CECCR at King Abdulaziz University
417
Declarations
Conflict of interest The authors declare no conflict of interest.
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