On the economics of forests and climate change: Deriving optimal policies

First-best optimal forest sector carbon policy is examined. Using a forest and energy sector model with a carbon cycle module we show that the renewability and carbon neutrality arguments do not warrant emission free status of wood use. As a general optimality principle, the release of carbon is penalized by a tax and carbon capture is subsidized. However, under the biomass stock change carbon accounting convention, the land owners pay for the roundwood emissions and, to avoid double counting, the use of roundwood is treated as emission free. Yet, the carbon accounting convention followed does not affect the equilibrium outcome. The bioenergy from harvest residues is not emission free either. Furthermore, we show that an optimal policy subsidizes the production of wood products for their carbon sequestration. Correspondingly, carbon removals by biomass growth are subsidized and the harvest residue generation taxed. Numerical solution of the model shows that, although the use of wood is not emission free, it is optimal to increase the use of wood, possibly also in the energy sector. Before the wood use can be increased, the forest biomass will be increased. This carbon sink decreases the net emissions until the forest resources reach a new equilibrium.     

关于林权抵押贷款贷款期限的探讨

从林农经济利益角度出发,运用经济分析和数学推理的方法,引入生物生长模型,在分析林木蓄积、林木资产价值和贷款资金的时间价值基础上,确立合理的采伐时间和最佳的采伐时间,进而确立可行的贷款期限和最低贷款期限、最佳的贷款期限。以马尾松为例,进行实际计算分析,得出可行的贷款年限为8～19年,8年为最低贷款年限,19年为最佳的贷款年限。     

The Optimal Length of an Agricultural Carbon Contract

In this paper, we present the economic determinants of the optimal length of a carbon offset contract. We find that because of a declining capacity of the soil to sequester carbon, the optimal length of the carbon contract is finite (the marginal benefit of remaining in the contract is declining over time, whereas marginal opportunity cost is rising). We also explore the effect of varying key parameter values on the optimal length in the contract. If the contract requires the farmer to sequester at a higher rate, the farmer chooses the contract for a shorter length of time, and this may decrease rather than increase social welfare. If society places a higher value on carbon accumulation, the contract is chosen for a longer length of time. Finally, if both the farmer and society have a higher discount rate, the model provides a somewhat surprising result. The overall time in the contract, and benefits from carbon accumulation are higher when the common discount rate is higher.     

A modified production possibility frontier for efficient forestry management under the New Zealand Emissions Trading Scheme

Carbon sequestered through increased forest biomass provides a low cost means to curb emissions and has become a major focus of New Zealand's Emissions Trading Scheme. We present a forest planning optimisation model where land use is governed by forest owners maximising the returns to both timber harvest and carbon sequestration. By varying carbon prices, we model efficient trade‐offs between the two forest activities along a modified production possibility frontier for four distinct wood supply regions in New Zealand. Results show that while more productive regions such as the Central North Island (CNI) and Northland have a greater capacity as a carbon sink, it is the less productive regions that have a comparative advantage in carbon sequestration in terms of a lower cost of wood production revenue foregone. However, moderate increases in carbon uptake can be achieved in the CNI at low opportunity cost by subtle changes in forestry management. The implication for policy‐makers is that initial increases in carbon sequestration will be achieved at the lowest cost to society by favouring high volume timber production in some productive woodland areas and/or by more carbon farming in less productive areas.     

Boreal Forest Carbon Sequestration Strategies: A Case Study of the Little Red River Cree First Nation Land Tenures*

In this paper, creation of carbon offset and emission reduction credits are examined from the perspective of the Little Red River Cree Nation (LRRCN), a forest tenure holder in northern Alberta. Carbon credits are produced under three scenarios: (1) carbon uptake in forest ecosystems, with postharvest waste left on site; (2) carbon uptake in forests and products; and (3) carbon uptake in forests with harvested fiber used for energy production. A mathematical programming model is used to solve for the minimum prices that cause the LRRCN to include production of carbon credits in its forest management and post‐harvest processing strategies. If LRRCN is paid according to its costs of creating carbon credits, it will opt to use fiber for forest products as this provides the greatest earning potential. If LRRCN faces a fixed price for carbon credits, it will produce fiber for generating electricity in lieu of coal as this strategy has the lowest average cost. However, when costs of feedstock transportation and construction of a power plant are taken into account, carbon uptake in biomass and forest products turn out to be more competitive.     

Is forest carbon sequestration at the expense of bioenergy and forest products cost-efficient in EU climate policy to 2050?

Forest management affects the quantity of CO₂ emissions in the atmosphere through carbon sequestration in standing biomass, carbon storage in forest products and production of bioenergy. The main question studied in this paper is whether forest carbon sequestration is worth increasing at the expense of bioenergy and forest products to achieve the EU emissions reduction target for 2050 in a cost-efficient manner. A dynamic cost minimisation model is used to find the optimal combination of carbon abatement strategies to meet annual emissions targets between 2010 and 2050. The results indicate that forest carbon sequestration is a low-cost abatement method. With sequestration, the net present costs of meeting EU carbon targets can be reduced by 23%.     

Review - Roger A. Sedjo (2003): Economics of Forestry

Ashgate Publishing Limited, Gower House, Croft Road, Aldershot, Hants GU11 3HR, England (www.ashgate.com). 498 p. £ 100.00. ISBN 0-7546-2237-1 (hardback).Being one volume in the series of the International Library of Environmental Economics and Policy (T. Tietenberg and W. Morrison, gen. eds.), this book is a collection of some of the most significant journal essays in forest economics and forest policy. In compiling this volume, Roger Sedjo did a great service to the forest economics profession.This volume includes twenty-five essays originally published between 1849 and 1996 in a dozen journals, and one chapter from the Third Assessment Report of the International Panel on Climate Change (IPCC, 2001) which addresses the biological sequestration of carbon in terrestrial ecosystems. These are organized into four parts: the harvest rotation issue, timber supply, multiple-use and non-timber outputs, and global issues. An introduction essay to this volume, written by the editor, provides an overview of the major issues in forest resource management and discusses some the most important contributions to the forest economics literature.The eleven essays in the first part of the book provide a rather complete coverage of the most important contributions to the literature on optimal rotation age, which is a fundamental issue in forest management and forestry investment. Four of the essays (Faustmann 1849, Ohlin 1921, Bentley and Teeguarden 1965, and Samuelson 1976) address the basic formulation and interpretation of the optimal rotation model. Four essays (Löfgren 1985, Newman, Gilbert and Hyde 1985, Reed 1984, and Brazee and Mendelsohn 1988) extend the basic rotation model to examine the rotation age decision in the presence of deterministic trends and uncertainty in timber yield and price, respectively. Based on the Faustamnn rotation model, Klemperer (1976) and Chang (1982) examine the impacts of taxation on forest value and on the optimal rotation age. Koskela (1989) provides a detailed analysis of the impacts of taxation on timber harvest decisions under price uncertainty. What I feel missing in this part is a comparative statics analysis examining the impacts of changing economic parameters on the optimal rotation age.Part II includes five essays on economic analysis of long-run timber supply. Clawson (1979) reviews the historical development of forest resource and forest utilization in the United States. Vaux (1973) examines the long-run potential supply of timber from forest plantations in California. Berck (1979) investigates the difference in harvesting behavior between private forest owners and public managers. Lyon (1981) and Lyon and Sedjo (1983) examine the optimal exploitation of old-growth natural forests and the transition to steady state. While these essays all focus on the long-run timber supply in the United States, the methods developed and used in these papers could be applied for any other region. The exploitation of old-growth natural forests and the long-term availability of timber have been without doubt two major concerns in the United States. In many parts of the world, however, concerns about timber supply in the short-run have also had great influences on the development of forest policy. It would have been appreciated if a couple of essays addressing the short-run supply of timber had been included.Part III contains three essays dealing with the problem of multiple-use forest management. Gregory (1955) develops an economic framework for multiple-use management based joint production theory. Hartman (1976) examines the multiple-use rotation age decision. Swallow, Parks and Wear (1990) investigate the problem of non-convexities involved in multiple-use rotation age decisions. The merits of these essays lie in that they use rather simple models to demonstrate the importance of incorporating non-timber benefits in forestry decisions and the complexities of the multiple-use problem. In his 1976 essay, Hartman points out that in many situations management practices applied to one stand affect the value of non-timber outputs derived from the adjacent stands; such interdependence needs to be incorporated into multiple-use decision analysis. I certainly would like to find in this volume one or two essays examining the impacts of stand interdependence on the optimal decision. Another important issue in multiple-use management, which is not covered in this volume either, is the valuation of non-market priced outputs and services. Yet I believe that this omission is well motivated, for there are two separate volumes in this series devoted to non-market valuation methods (R. T. Carson, ed. Direct Environmental Valuation Methods, Volumes I and II).The seven essays in Part IV deal with a set of forest economic and policy issues related to global warming and biodiversity conservation. Parks and Hardie (1995) examine the cost-effective subsidies to convert marginal agricultural land to forests for the purpose of carbon sequestration. Hoen and Solberg (1993) analyze the potential and cost-effectiveness of increasing carbon sequestration in existing forests by changing forestry practices. van Kooten, Binkley and Delcourt (1995) examine the effect of carbon taxes and subsidies on the optimal rotation age. The chapter from the Third Assessment Report of IPCC (2001) provides a comprehensive review of the literature on the ecological, environmental, social and economic aspects of carbon sequestration in terrestrial ecosystems. While forests and forest management could play an important role in mitigating climate change, increasing level of atmospheric dioxide and climate change would inevitably affect the productivity of forest ecosystems, thereby could have significant impacts on future timber growth, harvest and inventory as well as carbon storage in forest ecosystems. Joyce et al. (1995) present a framework for analyzing the potential effects of climate change on the forest sector. The remaining two essays in this part examine the costs and benefits of biodiversity preservation, respectively. Montgomery, Brown and Adams (1994) estimate the marginal cost of preserving the northern spotted owl. Simpson, Sedjo and Reid (1996) examine the expected value of the marginal species as an input to pharmaceuticals.The editor points out in the introduction chapter that there are many other important contributions that are not included in this volume, some of these are mentioned, others not. In addition to the few omissions noted earlier, several important economic and policy issues such as uneven-aged stand management, deforestation, international trade, sustainable forestry, forest recreation, wildlife management and so on are not discussed. Moreover, none of the journal essays published since 1997 is selected. That there are many other important contributions does not mean the essays included in this volume are less important, however. While each forest economist may present a different list of the most important papers, most (if not all) of the essays in this volume would appear on anyone's list. I strongly recommend this book for research scientists and graduate students of forest economics as an essential addition to their reference library.     

The potential and cost of increasing forest carbon sequestration in Sweden

This paper examines the potential and the cost of promoting forest carbon sequestration through a tax/subsidy to land owners for reducing/increasing carbon storage in their forests. We use a partial equilibrium model based on intertemporal optimization to estimate the impacts of carbon price (the tax/subsidy rate) on timber harvest volume and price in different time periods and on the change of forest carbon stock over time. The results show that a higher carbon price would lead to higher forest carbon stocks. The tax/subsidy induced annual net carbon sequestration is declining over time. The net carbon sequestration during 2015–2050 would increase by 30.2 to 218.3 million tonnes of CO₂, when carbon price increases from 170 SEK to 1428 SEK per tonne of CO₂. The associated cost, in terms of reduced total benefits of timber and other non-timber goods, ranges from 80 SEK to 105.8 SEK per tonne of CO₂. The change in carbon sequestration (as compared with the baseline case) beyond 2050 is small when carbon price is 680 SEK per tonne of CO₂ or lower. With a carbon price of 1428 SEK per tonne of CO₂, carbon sequestration will increase by 70 million tonnes of CO₂ from the baseline level during 2050-2070, and by 64 million tonnes during 2070–2170.     

林权变动对森林资源培育和木材供给的影响分析

基于林地配置和木材供给的计量经济学模型,利用7个南方县的面板数据进行实证分析。回归结果显示,经济发展对森林覆盖率产生正面的影响,人口压力对森林覆盖率有消极的影响,采伐等相关成本上升和实际利率提高会减少市场上商品材的供给。结果还显示,林权改革显著地增加了南方集体林区商品材供给,但由于样本数据观测期短,暂未发现林权改革增加南方集体林区森林覆盖率。     

Optimal forest harvest age considering carbon sequestration in multiple carbon pools: A comparative statics analysis

We present an analytical model for determination of the economically optimal harvest age of a forest stand considering timber value, and the value of carbon fluxes in living biomass, dead organic matter, and wood products pools. Through comparative statics analysis, we find that consideration of timber value and fluxes in biomass carbon increase harvest age relative to the timber only solution, and that the effect on optimal harvest age of incorporating fluxes in the dead organic matter and wood products pools is indeterminate.We also present a numerical example to examine the magnitudes of these effects. In general, incorporating the dead organic matter and wood products pools have the effect of reducing rotation age. Perhaps more interestingly, when initial stocks of carbon in dead organic matter or wood products pool are relatively high, consideration of these pools can have a highly negative effect on net present value.     

Designing afforestation subsidies that account for the benefits of carbon sequestration: A case study using data from China's Loess Plateau

This paper presents a method for determining the subsidy required to motivate farmers to participate in timber afforestation programs designed to maximize social well-being. The method incorporates a carbon sequestration benefit function into the land expected value model in order to quantify the social benefit arising from carbon sequestration by the planted trees. This is used to calculate the optimal rotation age for newly planted forests that maximizes social utility. The minimum subsidy required to motivate farmers to participate in the afforestation program was calculated using a modified decision model that accounts for the subsidy's impact. The maximum subsidy offered by the government was taken to be the NPV of the carbon sequestration achieved by afforestation. Data on Robinia pseudoacacia L. trees planted on the Loess Plateau were used in an empirical test of the model, which in this case predicts an optimal subsidy of 254.38 yuan/ha over 40 years. This would guarantee the maintenance of forest on land designated for afforestation until they reached the socially optimal rotation age. The method presented herein offers a new framework for designing afforestation subsidy programs that account for the environmental service (specially, the carbon sequestration) provided by forests.     

Economics of carbon sequestration under fluctuating economic environment,forest management and technological changes: An application to forest stands in the southern United States

This study presents a model that determines the effect of current and future payments for carbon sequestration, proportion of wood that sequesters carbon in long-lived product and landfills, and amount of carbon in the wood, on the optimal current forest harvest age. Increased current and future prices of carbon would lead to a longer and shorter harvest age, respectively. Higher current prices of carbon could increase the supply of carbon at a decreasing rate due to longer harvest ages. Moderate prices of carbon would encourage landowners to maintain standing timber. Policies focused then on stimulating landowners to hold timber on forestlands may not necessarily imply higher amounts of sequestered carbon. Increased future values of carbon could imply a reduction of the current supply of carbon.     

Rewarding carbon sequestration in South-Western French forests: A costly operation?

The extension of rotation lengths in forests has been proposed as an option for increasing carbon storage and contributing to climate change mitigation. This paper presents the results of a case study conducted on forests located in the southwest of France. The aim of this research was to assess the cost effectiveness of a subsidy/tax system on carbon fluxes. First, it is shown that such a mechanism leads forest owners to extend rotation lengths. However, cost effectiveness analysis shows that: (1) marginal social costs are more expensive than the private marginal costs of carbon sequestration; (2) marginal costs are higher when carbon stocks are discounted, ranging from 170.1 €/tC to 719.8 €/tC with discounted carbon stocks; and from 38.8 €/tC to 78.4 €/tC with undiscounted carbon stocks; (3) marginal costs are in the range of measures of the social value of carbon for France; (4) marginal costs increase with timber prices and increase with discount rate.     

森林碳汇与经济增长的互动关系

基于1998—2018年的林业数据,采用边际碳减排成本作为森林碳汇价格的代理变量,构建森林碳汇与经济增长的面板向量自回归模型(PVAR),从经济价值角度探析森林碳汇与经济增长的长期互动关系。结果表明:经济增长通过加大对森林自然资本的投资、改变林产品消费结构和产业结构、转变林业发展方式三条路径促进森林碳汇发展;但是,由于中国以生态建设为主的森林经营理念和森林碳汇市场功能不完全,以至于森林碳汇"抑制"经济增长。鉴于经济增长推动森林碳汇发展而森林碳汇在短时间内"抑制"经济增长,建议加快健全森林碳汇交易平台、完善森林碳汇定价机制、合理界定森林碳汇产权、加强森林管理和提高森林质量,促进森林碳汇与经济增长融合发展。     

限额采伐管理制度对林农采伐决策影响分析——基于采伐成本的思考

引入消费成本的概念,分析了限额采伐管理制度下林农沉重的采伐成本。政府与林农的不完全信息动态博弈模型揭示了如果采伐成本负担过重,无论政府的支付函数如何,林农的最优选择都是滥伐。福建省闽侯县林业局的林政执法案件统计资料及200户林农调查问卷的分析结果表明限额采伐管理制度是导致"林木滥伐"的重要因素。     

森林碳汇项目有助于减贫吗?

基于2005—2014年大兴安岭图强林业局碳汇造林项目的项目地潮河林场、奋斗林场、二十八站林场和育英林场的数据,建立结构方程模型对森林碳汇项目促进减贫的影响因素及其之间的关系进行实证分析。结果表明:森林碳汇项目通过促进社会就业情况和经济情况有助于减缓贫困,并且社会就业情况在减贫影响上比经济状况贡献度高;而森林碳汇项目造林阶段的造林面积对减缓贫困在一定程度上呈正相关关系。通过结果分析表明只有基于内生发展动力和贫困人口的自我发展能力的森林碳汇项目开发设计,由"输血型"模式变为"造血型"模式,才能更好地实现应对气候变化和缓解贫困两个目标。     

基于碳汇价值的森林最优轮伐期分析

从林地经营者追求不同森林经营目标出发,理论分析了林地经营者追求经济效益最大化、环境效益最大化、经济效益和环境效益最大化的森林最优轮伐期,进而分析碳汇价值下的森林最优轮伐期,并考察京都机制下实现有林地碳汇价值的最优轮伐期情况,发现在追求林地期望价值最大化的条件下,考虑碳汇价值的森林经营行为,如轮伐期、土地利用方式、造林等将会发生变化,同时碳汇价值的实现需要相应政策制度的完善和碳汇市场的发展。     

Economic value of carbon sequestration in forests under multiple sources of uncertainty

The purpose of this paper is to calculate the value of stochastic carbon sequestration in climate change mitigation when also carbon dioxide emissions from fossil fuels and abatement costs are stochastic. The replacement cost method is used where the value of carbon sink is calculated as associated cost savings from replacement of more expensive mitigation options for achieving a given emission target. Minimum costs with and without carbon sinks are derived with a safety-first approach in a chance constrained programming framework which also accounts for variability in control costs. The theoretical results show that for high enough risk discount, carbon sink is not included in a cost effective mitigation program even when the carbon sink cost is zero. The empirical application to the EU independent commitment of 20% reduction in carbon dioxides shows large variation in carbon sink value depending on risk discount. Under no uncertainty, the value can correspond to 0.33% of total GDP in EU, but it declines due to the uncertainty associated with forest carbon sink and is zero for high probability levels in achieving the target. Thus, whether or not to recommend the inclusion of carbon sink in the EU climate policy depends on the uncertainty of carbon sinks in relation to other sources and on the importance of reaching stipulated emission reduction targets.     

Editorial - Multiple-use forestry

The problem of multiple-use forestry arises because (1) a forest can be managed to provide a wide range of products and services, (2) the different uses are not perfectly compatible with each other, and (3) some products are not priced in markets and many of the services a forest provides have the characteristics of public goods. Examples of major forest products include, in addition to timber, edible berries, fungi, and hunting games. Forests also provide recreation opportunities and various environmental services (such as regulating local climate, reducing soil erosion, reducing pollutants in the atmosphere, regulating the global climate, providing habitats for wildlife, etc.). The outputs of nontimber goods in general depend on the quantity and structure of the forest, which can be changed by various forest management activities. However, a forest state most suitable for the production of one good is usually not optimal with respect to another good. Typically, there does not exist a set of management activities that simultaneously maximize the outputs of timber and all other goods.Another way to understand the conflicts between different uses is to view standing timber as an intermediate product of forestry investment, which is employed as an “input” for the production of timber products and nontimber goods. Thinking in this way, the conflicts arise partly because timber production and nontimber uses compete for the same input, and partly because of the differences in the “production technology” among different nontimber goods. A change in the standing timber may have positive impacts on some nontimber uses, but have negative effects on others. Because of the conflicts among different uses, it requires that both timber products and nontimber goods should be explicitly incorporated into forestry decision-making in order to achieve the greatest benefits to the forest owner and/or the public.Most of the economic analyses of multiple-use forestry decisions have explicitly or implicitly adopted the view that multiple-use should be achieved in individual stands. Each stand should be managed to produce an optimal mix of timber products and nontimber goods. Another view of multiple-use forestry is to manage each stand for a primary use, whereas multiple-use concerns are addressed by allocating different stands in a forest to different uses. A general argument in support of the primary-use view is that specialization makes for efficiency. The production of timber and nontimber goods is a joint process, however. Strictly speaking, one cannot separate timber production and the production of different nontimber goods. For example, managing a stand for timber production does not exclude the possibility of producing some nontimber goods in the stand. Since every stand usually produces more than one product, efficient multiple-use forestry requires that each stand should be managed for an optimal mix of timber and nontimber outputs. On the other hand, it may well be the case that the optimal multiple-use mix for a particular stand consists of a maximum output of one product. In this case the optimal multiple-use management decision would coincide with the optimal decision pertaining to a single use. In other words, it may be optimal to manage a particular stand for one primary use. Using the terminology of economics, primary-use may be efficient for stands in which the multiple-use production set is nonconvex. Recent research has explored several sources of nonconvexity in the multiple-use production set. However, there is no evidence supporting the argument that specialization is always more efficient than multiple-use management of individual stands. From an economics viewpoint, efficient primary-use is special cases of multiple-use stand management.A widely recognized limitation of multiple-use stand management is that, by considering each stand separately, one neglects the interdependence of nontimber benefits and ecological interactions among individual stands. The nontimber benefits of a stand depend on the output of nontimber goods from other stands. Likewise, the nontimber output from one stand affects the value of nontimber goods produced in the other stands. Ecological interactions among individual stands imply that the output of nontimber goods from two stands in a forest differs from the sum of the outputs from two isolated stands. These interdependence and interactions imply that the relationship between the nontimber benefits of a stand and the stand age (or standing timber stock) cannot be unambiguously determined - it depends on the flow of nontimber goods produced in the surrounding stands. Therefore, it is improper to determine optimal decisions for the individual stands independently. In stead, efficient multiple-use forestry decision should be analyzed by considering all the stands in a forest simultaneously.Another serious limitation of multiple-use stand management is that each stand is treated as a homogenous management unit to be managed according to a uniform management regime. One implicitly assumes that the boundaries of each stand is exogenously given and will remain unchanged over time. This assumption imposes a restriction on the multiple-use production set, thereby creates inefficiency. As an example, consider a large stand with a nonconvex production set. It may be possible to eliminate nonconvexity in the production set and push the production possibility frontier outwards by dividing the stand into several parts and managing each part for a primary-use. It may also be efficient to combine two adjacent stands into one to be managed following a uniform regime, because of the presences of fixed management costs, and/or because the relationship between some nontimber outputs and stand area is not linear.In contrast to income from timber production, nontimber goods produced at different time points are not perfect substitutes. The rate at which a forest owner is willing to substitute a nontimber good produced at one time point for that produced at another time point changes with the outputs of the nontimber good at the two time points. In general cases, the nontimber goods produced at one time point cannot be consumed at another time point, and the marginal utility of a nontimber good decreases when its output increases. This provides a motivation for reducing the variation in the output of nontimber goods over time. An effective approach to coordinating nontimber outputs over time is to apply different management regimes to different parts of a stand, or apply the same regime to adjacent stands, which would change the boundaries of the stands. Preserving the existing stand boundaries would limit the possibility of evening out the nontimber outputs over time, and thereby lead to intertemporal inefficiency in multiple-use management.In previous studies of multiple-use forestry decisions the nontimber outputs or benefits are usually modeled as functions of stand age or standing timber stock. Future flows of nontimber goods or benefits are incorporated into a stand/forest harvest decision model to explore the implications of nontimber uses for optimal harvest decisions. While stand age and standing timber stock may have significant impacts on nontimber outputs, other forest state variables, e. g. the spatial distribution of stands of different ages/species, may be of great importance to the production of nontimber goods. Recognition of such forest state variables could change the relationship between timber production and nontimber outputs and therefore change the optimal forest management decisions.In summary, multiple-use forestry is not simply an extension of timber management with additional flows of benefits to be considered when evaluating alternative management regimes. Recognition of multiple uses of a forest leads to two fundamental changes of the forestry decision problem. First, the optimal intertemporal consumption of forestry income is no longer separable from forest management decisions. In general, the optimal intertemporal consumption of forestry income depends on future flows of nontimber goods, implying that the consumption-saving decision should be made simultaneously with the decision on the production of timber and nontimber goods over time. Secondly, it is no longer appropriate to optimize the management regime for each stand separately. The nontimber outputs from a forest depend on the age distribution of individual stands, and on a wide range of other forest state variables such as the spatial distribution of stands of different ages and tree-species composition. Ecological interactions and interdependence among stands imply that management regimes for different stands should be optimized simultaneously. In addition to changing rotation ages and harvest levels, efficient multiple-use forestry requires optimizing the spatial allocation of harvests, redefining the boundaries of stands, coordinating the choices of tree species in regeneration of harvested area and so on.The lack of rigorous production functions for nontimber goods imposes a severe restriction on attempts to perform comprehensive economic analyses of multiple-use forestry decisions. This restriction in itself is no justification for ignoring many of the key aspects of multiple-use forestry problem and modeling the problem as one of determining the optimal rotation age or optimal harvest level. It requires that economic models of multiple-use forestry should be developed with special consideration of the vague and imprecise information regarding the relationships between nontimber outputs and forest state variables.Peichen GongDepartment of Forest EconomicsSE-90183 UmeåSweden     

Optimizing joint production of timber and carbon sequestration of afforestation projects

Optimizing harvesting decisions has been a matter of concern in the forestry literature for centuries. However, in some tropical countries, growth models for fast-growing tree species have been developed only recently. Additionally, environmental services of forests gain importance and should be integrated in forest management decisions. We determine the impact of a joint production of timber and carbon sequestration on the optimal rotation of a fast-growing species in north-western Ecuador, comparing different optimization approaches and taking the latest developments of the Kyoto Protocol into account. We find that payments for carbon sequestration have substantial impact on the rotation length: in contrast to an optimum of 15 years when focusing on timber production only, joint production leads to a doubling of the rotation length, which means that timber harvest should be postponed until the end of the carbon project.