Abstract: Forestry resources possess a strong carbon sequestration function and are a cornerstone in achieving carbon peak goals. Reasonable assessment of forestry carbon sequestration project value can accelerate the development of the forestry carbon sequestration market and alleviate China's carbon emission pressure. This paper takes the carbon sequestration afforestation project in Xiantai County, Zhejiang Province as the research object. Using binomial option pricing method and the GARCH model, this paper estimates the value volatility parameter, and empirically examines the additional impact of option value on the economic value of forestry carbon sequestration projects. The finding shows that the option value has a significant positive effect on enhancing the value of forestry carbon sequestration projects, increasing the project value by 71. 5% when considering the option value. By sensitivity analysis, the value volatility and project option price move in the same direction. Using the GARCH model to estimate value volatility is of great significance in pricing forestry carbon sequestration projects. Based on the research conclusions, the following recommendations are proposed: clarify the rules for carbon sink trading and improve the pricing mechanism of the carbon sink market; and promote financial innovation in carbon sinks and encourage diversification of investment strategies.