Danish politicians, economists, and environmental organizations are facing a significant economic challenge as the government’s plan to plant 250,000 hectares of new forest will cost around 20 billion Danish kroner. This ambitious project, equivalent to double the size of Lolland, is part of the government’s green tax reform, which was presented earlier this year. According to economics professor Michael Svarer, who has been primarily responsible for calculating the costs related to the report, the project will require an annual investment of about one billion kroner until 2045. “It is a considerable sum, but necessary to achieve our climate goals,” Svarer told Jyllands-Posten.
The project entails that farmers receive compensation for not cultivating their land, but instead planting forests. The cost of converting agricultural land to forests is set at 92,000 kroner per hectare. This cost is in line with EU’s rules on state aid, emphasizing the complexity and scale of the project. The government’s initiative is part of a larger plan to reduce Denmark’s CO2 emissions. Even though the new forest will only contribute to a reduction of 0.1 million tons of CO2 in 2030, it is expected to absorb up to two million tons of CO2 by 2045, which is crucial for Denmark to achieve its goal of being climate neutral.
This week, the Climate Council has even proposed that even more forest should be planted – up to 414,000 hectares – in order to meet both national and EU environmental goals. These proposals clearly demonstrate the importance of afforestation in the broader climate effort. The government’s plans and the economic investments in afforestation will undoubtedly be a central topic in the upcoming political negotiations, especially regarding the financing and implementation of these green initiatives.