Consequences of carbon offset payments for the global forest sector

Long-term effects of policies to induce carbon storage in forests were projected with the Global Forest Products Model. Offset payments for carbon sequestered in forest biomass of $15–$50/t CO₂e applied in all countries increased CO₂ sequestration in world forests by 5–14 billion tons from 2009 to 2030. Limiting implementation to developed countries exported environmental damage from North to South, as developing countries harvested more, decreasing their stored CO₂e. Substantially more CO₂e was sequestered by allocating a given budget to all countries rather than to developed countries only. As offset payments increased wood prices relatively more than they decreased production, timber revenues generally increased. In the few countries with timber revenues losses they were more than compensated by the offset payments.     

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.     

Economics of carbon sequestration in community forests: Evidence from REDD+ piloting in Nepal

Reducing Emissions from Deforestation and Forest Degradation (REDD+) has been piloted in developing countries as a climate change mitigation strategy, providing financial incentives for carbon sequestration in forests. This paper examines the economic feasibility of REDD+ in community forests within two watersheds in central Nepal, Ludikhola and Kayarkhola, using data on forest product demand, carbon sequestration, carbon price and REDD+ related costs. The benefits of REDD+ are about $7994, $152, and $64 per community forest, per hectare of forest area, and per household in Ludikhola watershed compared to $4815, $29, and $56 in Kayarkhola watershed, respectively, under the business-as-usual scenario. Compared to the EU ETS carbon price ($10.3/tCO₂e), the average break-even carbon price in community forests is much higher in Kayarkhola watershed ($41.8/tCO₂e) and much lower in Ludikhola watershed ($2.4/tCO₂e) when empirical estimates of annual expenditure in community forests are included in the analysis. The incorporation of annual expenditure estimates and opportunity cost of sequestered carbon (in the form of firewood prices in local markets) in the analysis suggests that community forests are economically infeasible for REDD+ at the prevailing carbon prices. The implication of our findings is that economic feasibility of REDD+ in community forests depends on the local contexts, carbon prices and the opportunity costs, which should be carefully considered in designing REDD+ projects.     

Landowner net benefit from Stone pine (Pinus pinea L.) afforestation of dry-land cereal fields in Valladolid,Spain

This analysis measures the net benefit that a landowner could obtain from changing current dry-land cereal fields into Stone pine plantations in Portillo and Viana (Valladolid, Spain). We apply cost–benefit analysis techniques to estimate the present value of Stone pine afforestation net benefit by considering an infinite series of forestry rotations. We simulate three Stone pine silviculture models at each of the two sites. In addition, we estimate landowner extended net benefits from Stone pine afforestation when we consider a hypothetical payment for the carbon sequestration service. Results show that, when government subsidies are included, Stone pine afforestation only offers positive landowner net benefit in Portillo when both medium and high-stocking silviculture models are applied. Taking into account carbon prices up to €45 tC^?1 (€12.3 tCO₂^?1), Stone pine afforestation gives landowner positive extended net benefits for the three silviculture models simulated at the Portillo and Viana sites.     

Carbon mitigation potential of the French forest sector under threat of combined physical and market impacts due to climate change

Objectives(1) To quantify the contribution of the French forest-wood product chain in terms of carbon sequestration and substitution when accounting for both the physical impacts (shifts in tree growth and mortality rates) and the market impacts (increased demand of harvested wood products (HWP)) of climate change (cc) and the subsequent forest managers adaptations; (2) To assess the uncertainty of the impacts on the above carbon balance and on forest allocation; and (3) To assess the role of managers’ expectations toward these future, uncertain but highly anticipated, impacts.MethodologyWe used a bio-economic model of the French Forest Sector (FFSM++) that is able to consider and integrate: (a) the effects of climate change over forest dynamics; (b) forest investment decisions (among groups of species) according to expected profitability; and (c) market effects in terms of regionalised supply, consumption and trade of HWP, depending on the forest resource stocks and international prices. By including both forest dynamics and forest products, we can evaluate the carbon balance taking the following elements into consideration: (a) carbon sequestered in live and dead biomass in the forest; (b) carbon sequestered in HWP; (c) carbon substituted when wood is used in place of fossil fuels or more energy-intensive materials; and (d) carbon released by forest operations.ResultsWhen the model is run at constant conditions for the next century, the average carbon potential of French forests is 66.2–125.3 Mt CO₂ y⁻¹, depending on whether we consider only inventoried wood resources, HWP pools and direct energy substitution, or if we also account for the carbon stored in tree branches and roots and if we consider the more indirect, but also largely more subjective, material substitution. These values correspond to 18.3% and 34.7%, respectively, of the French 2010 emissions (361 Mt CO₂). However, when we consider both the probable increment of coniferous mortality and changes in forest growth, plus the rise in HWP demand worldwide, the average sequestration rate of the French forest decreases by 6.6–5.8% to 61.8–118.0 Mt CO₂ y⁻¹. Running partial scenarios, we can assess the relative interplay of these two factors, where the price factor increases the HWP stock while decreasing the forest stocks (where the latter effect prevails), while the physical impact of climate change reduces both, but to a lesser extent. Considering short-sighted forest managers, whose behaviour is based uniquely on the observed conditions at the time decisions are made, we obtain a limited effect of the overall carbon balance but a relatively large impact on the area allocation of broadleaved vs. coniferous species.     

The influence of crediting and permanence periods on Australian forest-based carbon offset supply

Governments globally are developing increasingly ambitious carbon emissions reduction schemes that include significant emissions offset credits for forest-based carbon sequestration. Such strategies can present significant challenges in highly modified and intensively farmed regions where forest land use opportunity and establishment costs are high. This article evaluates the economics of land-use change via active afforestation for local carbon abatement in the Australian state of South Australia, a region with high supply costs representative of long-established temperate farming regions. We found that there is no economically viable abatement below $38 tCO₂e⁻¹, however up to 154 Mt CO₂e of abatement could be available up to prices of $50 tCO₂e⁻¹.Variation in current Australian Emissions Reduction Fund (ERF) policy parameters related to permanence and crediting periods were also assessed. Recent ERF contracts involve a 100-year land-use change commitment (permanence period) and a 25-year crediting period where payments for growth in carbon from the land-use change is contracted. We compared outcomes of this arrangement to a scenario with equal 100-year permanence and crediting periods. We found substantial differences in carbon supply at some price points for a 25 rather than a 100-year crediting period. Under ERF parameters the first economically viable revegetation options occur at $42 tCO₂e⁻¹, however, we found a 69 percent reduction in economically viable supply at a carbon price of $50 tCO₂e⁻¹. The results highlight the role offset crediting policy can have on dis-incentivising land-use change and the need for landholders to be compensated fully for temporal opportunity costs.     

Carbon storage in a bamboo (Bambusa vulgaris) plantation in the degraded tropical forests: Implications for policy development

Tropical forests potentially contribute to global climate change mitigation through carbon sequestration, hence a global carbon pool. In order to mitigate the global climate change impact, the Kyoto protocol developed the clean development mechanism (CDM) which supports carbon credits for plantation activities in developing countries. Unfortunately, none of the CDM forestry projects included bamboo as a carbon reservoir. Although bamboo is an integrating part of tropical forest ecosystems, it was overlooked in the initial negotiating process. The present study, therefore, investigated the carbon storage potential of a common bamboo species, Bambusa vulgaris at Lawachara forest reserve of Bangladesh. Results showed that five-year-old B. vulgaris stand stored in total 77.67 t C ha⁻¹ of which 50.44 t C ha⁻¹ were stored in the above ground biomass (culms, branches and leaves), 2.52 t C ha⁻¹ in the below ground biomass and 24.71 t C ha⁻¹ in the soils. This amount of carbon storage is much more promising than the carbon storage of many other tree species considered in the CDM projects. These findings demonstrate the potential of B. vulgaris to be considered in CDM projects as a plantation species and thereby mitigate climate change impact more efficiently.     

Wood biomass use for energy in Europe under different assumptions of coal,gas and CO2 emission prices and market conditions

This study examines the effects of different coal, natural gas and carbon emission prices and market situations on the use of wood for electricity and heat production in the European Union. The analysis is carried out using the global forest sector model EFI-GTM expanded to cover electricity and heat production from wood, coal, natural gas, wind and solar energy. Analysis shows that with low coal and gas prices, use of wood for energy will be limited to low cost logging residues. With high coal, and especially natural gas prices, industrial wood also comes to be used for energy. At a carbon price of 100 €/tCO₂, some 32 Mm³ of industrial wood, in addition to 224 Mm³ of logging residues, are projected to be used for electricity and heat in the EU region (including Norway and Switzerland) in 2030. The relatively low quantity of industrial wood used by the energy sector despite the collapse of the use of coal is explained by the fact that under high CO₂ prices, other energy forms like natural gas, solar and wind energy become more and more competitive. However, the amount of industrial wood used for energy may substantially increase with subsidies for using wood for electricity and heat, even with relatively low carbon prices. With a high coal and gas price and a carbon price of 100 €/t, a subsidy of 30 €/MWh to the wood based and coal with wood co-firing electricity production will have a significant impact on the European wood based sector. Depending on the development of the market demand for forest industry products, such a subsidy may cause a 10–12.5% reduction in forest products production, a 6–9% increase in harvest level, about 30–60% increase in the pulpwood prices, and a 6–9 fold increase of wood imports in the EU, compared to the respective case without a subsidy in 2030.     

Interventions to better manage the carbon stocks in Australian Melaleuca forests

Forests and woodlands dominated by tree species of the genus Melaleuca cover around 7,556,000 ha in Australia and predominantly occur as wetland ecosystems. In this Viewpoint, we use published secondary data to estimate that there is likely to be between 158 tC/ha and 286 tC/ha stored in Melaleuca forests. These estimates are at least five times greater than the previous estimate made by the Australian Government (about 27.8 tC/ha). There are 2.1 million ha of protected Melaleuca forest which likely stock between 328 M tC and 601 M tC; equivalent to between 2.7% and 5.0% of total carbon storage of all Australian native forests. These estimates are significant because it appears that carbon stocks in Melaleuca forests are currently dramatically under-estimated in Australia's national greenhouse gas emissions inventory reported under the United Nations Framework Convention on Climate Change (UNFCCC). Whilst the precision of the estimates is limited by the availability of rigorous primary data, we also argue that the estimates are indicative and meaningful, and this synopsis highlights the fact that this forest type should be considered a significant carbon store nationally and globally.     

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.     

Forest fragmentation reduced carbon storage in a moist tropical forest in Bangladesh: Implications for policy development

Forest fragmentation is continued to be widespread in the tropics resulting in reduced ecosystem services including carbon storage. However, the effect of forest fragmentation is not considered in the current carbon policy. We investigated the effect of forest fragmentation on tree biomass carbon and soil organic carbon (SOC) storage in a moist tropical forest in Bangladesh. Above and below-ground tree biomass carbon were calculated by using widely accepted allometric equations and SOC was measured by sampling soils up to 10 cm depth and analyzing them in a soil laboratory. Results showed that carbon storage in tree biomass was significantly lower in fragmented forests (16.3 ± 1.37 t C ha⁻¹) than in contiguous forests (31.21 ± 2.75 t C ha⁻¹) (p < 0.001). Likewise, a significantly lower SOC was contained in the soils of fragmented forests (17.26 ± 0.83 t C ha⁻¹) than in contiguous forests (21.62 ± 0.78 t C ha⁻¹) (p < 0.001). Thus a total of 36% less carbon retained in tree biomass and soils in fragmented forests than in contiguous forests. Backward multiple linear regression analysis revealed tree density, tree height, tree DBH, height-diameter ratio (H/D) and tree species richness as influential factors of carbon variation in fragmented forests. All these structural parameters except tree species richness were significantly lower in fragmented forests, were positively associated with carbon storage and explained together 69% of the carbon storage variation. These findings suggest that the altered stand structure and tree allometry likely caused reduced carbon storage in fragmented forests and highlight the importance of landscape scale management intervention in the tropics. Here, we provided with the evidence of strong negative impact of forest fragmentation on carbon storage and argue that this effect should be in consideration which is currently overlooked in existing carbon accounting systems for tropical forests.     

Heterogeneity and assessment uncertainties in forest characteristics and biomass carbon stocks: Important considerations for climate mitigation policies

The management of forests to store carbon and mitigate climate change has received significant international attention during the last decade. Using in situ data from a 2008–2009 forest inventory field campaign in Sri Lanka, this study describes the structural characteristics and carbon stocks of six natural forest types. This paper has a dual scope: i) to highlight the variation in carbon stored in aboveground biomass within and between forest types and ii) to determine the implications of the allometric equations chosen to calculate biomass carbon stocks. This study concerns work related to climate change interventions, such as Reducing Emissions from Deforestation and Forest Degradation (REDD+) and other forest-related, performance-based initiatives that require proper monitoring, reporting, and verification of carbon stocks, sinks and emissions. The results revealed that forests are heterogeneous in terms of tree density and height–diameter relationships, both between and within the six forest types investigated. The mean aboveground carbon stock in the different forest types ranged from 22 to 181 Mg C ha⁻¹, and there were statistically significant differences in the carbon stocks of the six forest types in 7 of 15 cases. The estimated carbon stock depended heavily on the allometric equation used for the calculations, the variables, and its application to the specific life zone. Due to the diversity of forest structures, these results suggest that caution should be taken when applying default values to estimate forest carbon stocks and emission values in reporting and accounting schemes. The results also indicated the need for allometric equations that are context-specific for different forest types. Therefore, new field investigations and measurements are needed to determine these specific allometric equations, as well as the potential variation in forest carbon stocks in tropical natural forests.     

The impact of forest management plans on trees and carbon: Modeling a decade of harvesting data in Cameroon

By 2010, about 25% (180 million ha) of The International Tropical Timber Organization (ITTO) producer countries’ permanent forest estate was being managed using an approved forest management plan (FMP). While the existence of a FMP is often used as evidence of sustainable forest management (SFM), State officials mandated to monitor and verify FMPs’ implementation often lack the technical knowledge and political incentives to assess the changes that have been introduced, notably in terms of harvested volumes and species. Among tropical timber producers, Cameroon is considered to be exemplary for its progressive forest regulatory framework. Here we aim to estimate for the first time in sub-Saharan Africa the causal impact of the implementation of FMPs on harvested volumes, species and carbon stocks. We do so by using a 12-year (1998–2009) unbalanced longitudinal data set of a detailed, official harvesting inventory of 81 concessions in Cameroon. Results provide evidence to the theoretical expectations that for many years many practitioners have had on the implementation of SFM, i.e. that FMPs show a substantial opportunity to reduce carbon emissions from forest while presenting logging companies with acceptable financial trade-offs. We explore the technical and political reasons for our findings and conclude that these analyses are important for countries that are underwriting carbon-related schemes in which they propose to reduce their emissions through the effective implementation of SFM. We also demonstrate that producer countries do record useful information that, when effectively used, can help them to inform their policies and improve their sustainable development strategies.     

Assessing costs and benefits of pest management on forested landbases in eastern and western Canada

To assist pest management planning, the Canadian Forest Service developed the Spruce Budworm Decision Support System (SBW DSS), which quantifies the timber supply impacts of protecting stands against spruce budworm (Choristoneura fumiferana Clem.) defoliation. We incorporated protection costs and timber product values in this system to evaluate economic aspects of spruce budworm control. The analysis allows pest managers to evaluate the degree to which the traditional volume protection priority objective corresponds to three economic criteria, namely the volume protected per dollar protection program cost, the benefit–cost ratio of the protection program, and the net present value of the protection program. Twelve alternative spruce budworm protection strategies were analyzed on Crown License 1 in New Brunswick and Prince Albert Forest Management Area (PAFMA) in Saskatchewan, based on a number of protection program extents and intensities. For both landbases under base-case market conditions, the largest, most intensive protection scenario provided the highest amount of volume saved and net present value (at 3.94 Mm³ and $39.98 M for PAFMA, and 4.04 Mm³ and $41.49 M for License 1, respectively) while smaller, less-intensive programs provided the highest benefit–cost ratios and volume protected per present value dollar of protection cost (at 8.22 and 0.52 m³/$ for PAFMA, and 10.26 and 0.65 m³/$ for License 1, respectively). Sensitivity analysis on product values and protection costs revealed that smaller, less-intensive programs could also produce the highest net present values when costs are higher and/or product values lower. These results highlight the conditions under which pest managers should consider deviating from their traditional strategy of maximizing volume saved to one that maximizes the economic returns of protection.     

A dividing issue: Attitudes to the shooting of rear and release birds among landowners,hunters and the general public in Denmark

Why are organised shoots involving birds that are farm-reared and subsequently released a dividing issue in several countries? As a contribution to answering this question the paper reports a national survey of landowners (n = 1207), hunters (n = 1130) and the general public (n = 1001) in Denmark. While there was broad agreement across all three groups that recreational hunting of naturally occurring “surplus” wildlife is acceptable, the release of farm-reared game birds for shooting was a dividing issue, both within the groups and between them. The majority of participants (51%) in the survey representing the general public were against the practice; a majority of hunters (61%) were in favour of it; and landowner approval rates lay between these two poles. Respondents with a “mutualist” or “distanced” wildlife value orientation according to the definitions by Teel et al. (2005) consistently displayed a more negative attitude to rear and release shooting than those with a “utilitarian” orientation. The differences in attitude could not be explained in terms solely of underlying concerns about nature conservation and biodiversity protection. Concerns about the behaviour of the released birds, and about hunting “culture” and regulatory measures, also informed the participants’ attitudes. The regulatory framework governing shooting based on the release of farm-reared birds could reflect a wider range of concerns than those hitherto acknowledged.     

Landowners’ willingness to promote bioenergy production on wasteland − future impact on land use of cutaway peatlands

Landowners are the key players in bioenergy production on wasteland; such as cutaway peatlands. In this study, the landowner’s interest to use cutaway peatlands for bioenergy production was investigated using a survey and GIS (Geographic Information Systems) methods in an area in South Ostrobothnia, Finland. The focus was to identify which different bioenergy production chains are preferred by the respondents: combustion, gasification or biogas production from agriculture, energy-willow short-rotation forestry or forestry based energy crops. Also, the influence of personal environmental values on the selection was measured and the future impacts and barriers for the land use were assessed.Afforestation was the most popular after-use method among the landowners. The next most favorable method was energy crop cultivation but it was highly dependent on economic profitability and subsidies. Currently, approximately 8.2% or 500 ha of the total peat extraction area could be used for bioenergy production in the region by 2035. Based on the survey, forest based biomass is the best option if bioenergy is to be produced. The next choice was agro biomass and the least favored plant was willow. This study suggests that the biggest cutaway peatlands will be converted to forest energy in the future. Suggestive results were that the owners with high environmental values are especially interested in agro biomass growing and the landowner having a distant home place does not have a negative influence on bioenergy production. Altogether, land use and biomass production of cutaway peatlands is connected with the demands of the Finnish bio-economy.     

Analysing foregone costs of communities and carbon benefits in small scale community based forestry practice in Nepal

Reducing emissions from deforestation and forest degradation, conservation and sustainable management of forests and enhancement of forest carbon (REDD+) are considered to be important cost effective approaches for global climate change mitigation; therefore, such practices are evolving as the REDD+ payment mechanism in developing countries. Using six years (2006–2012) data, this paper analyses trade-offs between carbon stock gains and the costs incurred by communities in generating additional carbon in 105 REDD+ pilot community forests in Nepal. It estimates foregone benefits for communities engaged in increasing carbon stocks in various dominant vegetation types. At recent carbon and commodity prices, communities receive on average US$ 0.47/ha/year of carbon benefits with the additional cost of US$ 67.30/ha/year. One dollar’s worth of community cost resulted 0.23 Mg of carbon sequestration. Therefore, carbon payment alone may not be an attractive incentive within small-scale community forestry and should link with payments for ecosystem services. Moreover, the study found highest community sacrificed benefits in Shorea mixed broadleaf forests and lowest in Schima-Castanopsis forests, while carbon benefits were highest in Pine forests followed by Schima-Castanopsis forests and lowest in Rhododendron-Quercus forests. This indicates that costs and benefits may vary by vegetation type. A policy should consider payment for other environmental services, carbon gains, co-benefits and trade off while designing the REDD+ mechanism in community based forest land use practice with equitable community outcomes. The learning from this study will help in the formulation of an appropriate REDD+ policy for community forestry.     

Economic impacts of adjacency and green-up constraints on timber production at a landscape scale

Although many different forest certification standards exist, harvest adjacency and green-up regulations are common to most certifying bodies. This study develops a means for evaluating trade-offs associated with implementation of nth-order adjacency and green-up constraints on a 1.7 million ha landscape in Oregon in the US. Depending on the type of adjacency structure and delay between harvests, the opportunity cost of the restrictions, estimated by the change in discounted sum of producer and consumer surplus in the regional log market, ranged from 0.25% to 66% (or US $60 million to $15.3 billion) of the unconstrained value. Increasing green-up delays beyond 30–40 years had little effect on estimated opportunity cost of the modeled restrictions.     

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.     

Scale of harvesting by non-industrial private forest landowners

We examine the intensity of harvesting decision by non-industrial landowners at the lowest price offer they deem acceptable, using a multiple bounded discrete choice stated preference approach that draws upon and connects two subfields of forestry, one identifying characteristics of landowners important to past harvesting or reforestation decisions, and another proposing how landowners evaluate price offers for forest harvesting decisions. Variables important to harvest intensity choices when the landowners find an acceptable price have only been considered for those landowners who actually have participated in harvesting markets, whereas here we examine the behavior of these individuals as well as those who are on the margin (i.e., have not harvested at prevailing current or past market prices). We show that harvest intensity depends critically on the extent of urbanization, indicated by the presence of structures on a parcel as well as forested tract size, along with landowner characteristics such as absenteeism and length of ownership. The results are useful for understanding the timber management behavior for a majority of landowners who may not harvest at prevailing prices, but may participate should prices reach a level acceptable to them, where this level is determined by individual preferences for standing timber resources.