The global forestry industry is shifting from timber-centric valuation to an asset logic in which carbon revenues, permanence obligations and climate risk are financially material. Traditional discounted cash flow valuations, commonly parameterised with empirical or statistical growth models and a single “base case” future, are increasingly fragile under changing climate conditions and disturbance regimes, and can overstate value when carbon reversal risk and long-dated liabilities are not treated explicitly, as illustrated by wildfire-risk adjustments in forest carbon valuation. For forest ecology and management, the core issue is that financially material outcomes (timber yield, carbon sequestration and reversal) are controlled by ecological processes – water balance, nutrient cycling, physiological stress and mortality – and by disturbance ecology (fire, drought, pests and storms), all of which interact with management. We argue that valuation practice in bioeconomy transitions will increasingly require transparent, scenario-based links between these biophysical mechanisms and financial outcomes, driven by rising drought and fire risk and by climate-related disclosure expectations such as ISSB/IFRS-aligned reporting standards, including Australia’s AASB S1/S2. In this Perspectives paper, we focus on process-based ecosystem models, particularly APSIM as it is being adapted for forestry, because of their ability to make these links explicit under novel climates; APSIM was developed by CSIRO and collaborating institutions, including the institution of several authors, and we discuss it here on the basis of that alignment rather than as a universally superior model. We outline how such models can be used to simulate growth, carbon dynamics and climate stress, and then translate the results into management-relevant and valuation-ready inputs for choices such as thinning, rotation length, species or genotype selection, and risk-mitigation actions. We also note an important current limitation: APSIM’s forestry capability is still under active development, including representation of tree mortality, which is central to valuation under climate risk. We conclude by identifying practical challenges for adoption – translation of model outputs into decision metrics, governance and assurance of assumptions, communication of uncertainty, and integration with existing valuation workflows – and propose a pragmatic path for bringing process-based modelling into forest planning and valuation practice.
Mendham et al. (Mon,) studied this question.