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This study uses simulations to investigate the effects of imple-menting two different Japanese forestry subsidy systems on timber pro-duction and carbon stock, and examines the consequences for harvesting strategies. An existing Local Yield Table Construction System (LYCS), a wood conversion algorithm, and a harvesting cost model were used in the simulations to test the applicability of different subsidies to the thinning of stands. Using forest inventory data collected by local govment staff, simulation output was used to calculate forestry profits, carbon stocks, subsidies, the amount of labor required, and the cost effectiveness of investing in subsidies. By comparing the output of simulations based on two scenarios, we found that both the clear-cutting area and the amount of harvested timber were larger under Scenario 2, in which the rules gov-ing subsidy allocations are more relaxed, than under Scenario 1, in which the rules are more restrictive. Because the harvested timber under Scenario 1 was mainly produced by clear-cutting, the forestry profits and the sub-sidy predicted in the early period of the simulation, were larger under Scenario 1 than under Scenario 2. In contrast, the carbon stock was larger under Scenario 2 than under Scenario 1. The simulation model is likely to be useful for improving Plan-Do-Check-Act cycles implemented in Ja-panese forest management systems.