Carbon Subsidies,Taxes and Optimal Forest Management

We consider the effect of carbon credit payment schemes on forest owners’ land use and harvest decisions. We study two possible credit allocation regimes: one where credits are allocated according to the actual amount of carbon sequestered by the trees on a piece of land and another where credits are allocated according to the long-run potential to sequester carbon on the land. Using a real options model with uncertain future timber prices, we examine the effect on the timing of harvests and the replanting-abandonment decision. We show that both schemes discourage deforestation. Compensating growers for actual carbon sequestration leads to longer rotation periods between harvests, while basing compensation only on the long-run potential level of sequestration induces shorter rotation periods. The former scheme leads to greater benefits of carbon sequestration at lower cost than the latter scheme. Although inducing moderate levels of sequestration is expensive under both schemes, the cost falls dramatically when the level of payments climbs above some threshold. Indeed, providing the payments are sufficiently generous, carbon credit payment schemes offer an effective means of increasing carbon sequestration. The views expressed in this paper are strictly those of the authors and do not represent the views of the New Zealand Commerce Commission. We thank Lewis Evans and two anonymous referees for many very helpful comments. Kevin Counsell, Steen Videbeck, and participants at an ISCR seminar also provided useful suggestions. Fletcher Forests Ltd and the New Zealand Ministry of Agriculture and Forestry generously provided data.     

Natural carbon capture and storage (NCCS): Forests,land use and carbon accounting

The use of forests as natural carbon capture and storage sinks is considered by introducing carbon sequestration benefits’ accounting in a multi-vintage partial equilibrium land-use model, under different carbon price scenarios. The consequences to timber and land markets and to the profile of the carbon sequestration time path are examined in the short-run, long-run, and transition. Following IPCC, three carbon accounting methods are considered: the carbon flow, the ton-year crediting and the average storage. A full proof of long-run optimality of steady-state forest is provided. Numerical simulations are performed and results discussed illustrating the setup's potential.     

The economic consequences of substituting carbon payments for crop subsidies in U.S. agriculture

There is a growing body of literature on the costs of sequestering carbon. However, no studies have examined the interplay between farm commodity programs and carbon sequestration programs. This study investigates two dimensions of the interaction between farm commodity programs and afforestation programs, using a price-endogenous sector model of agriculture in the United States. First, this study compares the fiscal and welfare costs of achieving specific carbon targets through afforestation, with and without current farm programs. Second, it examines the welfare, fiscal, and carbon consequences of replacing existing farm subsidies, wholly or in part, with payments for carbon. Two approaches, Hicksian and Marshallian, are investigated. In the first, the sector model is used to quantify the carbon consequences and fiscal costs associated with various combinations of farm commodity and carbon sequestration programs that leave consumers and producers in the U.S. agricultural sector no worse off than under existing farm programs. The second approach focuses on the carbon and welfare consequences of various farm commodity and carbon sequestration programs that hold total program fiscal costs constant at current levels. Althouth the methodology and data are applied to the United States, the issues addressed are common in a number of developed nations, particularly within the European Union (EU). Adapting existing sector models in these nations to perform similar analyses would provide policy makers with more precise information about the nature of the trade-offs involved with second-best policies for replacing farm commodity subsidies with tree planting subsidies.The research reported in this paper was partially funded by the United States Environmental Protection Agency under contract number 68W90077. It does not reflect the official position of that agency. Mention of trade names does not constitute endorsement.     

How Feasible is Carbon Sequestration in Korea? A Study on the Costs of Sequestering Carbon in Forest

In recent years, carbon sequestration has become a more attractive policy in Korea due to the increasing trend of marginal cropland and enhanced public awareness on adverse climate change phenomena. This study aims to calculate the unit costs of carbon sequestration programs through afforestation in Korea and examine the cost-effectiveness of programs. The basis of our simulation is an econometric land use share model, and province level of aggregated panel data are used for model estimation. Four scenarios are considered depending on whether the program includes the harvest and which tree species are planted. The approach of sequestration program is to pay the landowners to convert their lands to forest for a period of time in exchange of fixed annual payment in addition to tree establishment cost. Our results show that the unit cost varies from $122 to $486 per ton of carbon stored depending on the scenarios and payment levels. We found that the carbon sequestration can be a cost-effective mitigation policy in Korea although it is not the least cost option.     

Radiative forcing and the optimal rotation age

Forests help mitigate climate change by sequestering atmospheric carbon. However, boreal and high-latitude temperate forests may also contribute to global warming due to the albedo effect. The relative effects of carbon sequestration and albedo can be quantified in terms of radiative forcing. We present a stylized, stand-level analysis to determine the optimal rotation age when considering a tax/subsidy scheme based on radiative forcing and the notion of equivalent carbon emissions. Additional management decision variables considered include species choice and regeneration effort, since these can impact the albedo effect. We demonstrate analytically that the optimal rotation length is likely shortened when albedo-related equivalent emissions are incorporated, relative to a policy based only on carbon. Empirical results indicate that rotation ages do decrease relative to a “carbon only” policy, and approach the traditional (timber only) Faustmann rotation age as equivalent emission rates increase. Our results suggest that forestation does not necessarily provide climatic benefits in all circumstances, and that, at the margin, other opportunities for carbon reduction (e.g. abatement), or pursuing forestation in other locations, become more attractive.     

碳中和背景下城市碳汇功能及提升 策略——以沈阳核心区为例

城市是碳排放产生的主要地域空间，是进行“碳中 和”核算与政策制定的主体。除了减少固定能源与交通碳排放 外，增加城市碳汇也是实现“碳中和”的重要手段。通过分析 沈阳三环区域城市碳汇(植被、土壤、水系、建筑物)不同组 成部分的碳汇能力，估算出城市碳汇固碳量为430.93万t， 能够抵消沈阳市年能源消耗产生CO2的7.34%。在明晰城市 碳汇固碳机理、固碳潜力及其空间分布特征的基础上，提出增 加固碳面积与提升碳密度两方面的城市碳汇功能提升策略，旨 在为中国低碳规划与碳中和实现提供理论指导与技术支撑。     

Barriers to Massachusetts forest landowner participation in carbon markets

U.S. forests, including family-owned forests, are important carbon sinks and sources for carbon sequestration. Family forest owners constitute a significant portion of the overall forestland in the U.S., but little is known about their preferences for participating in carbon sequestration programs. The goal of this research is to understand what motivates Massachusetts family forest owners to participate in carbon markets. The study estimates the probability these landowners would engage in carbon sequestration programs using data from a survey of 930 Massachusetts family forest owners. Results from a random effects ordered probit indicate that under a carbon scenario similar to the current voluntary scheme, very few of these landowners would be interested in participating. Supply analysis indicates these landowners are more influenced to participate by factors other than price. Regression analysis results suggest that survey respondents are concerned about early withdrawal penalties, additionality requirements, and contract length. Forest owner harvesting plans, opinions about forest usage, and beliefs about climate change all play a significant role in the decision to participate. The study suggests that policy makers should consider the reasons behind these low participation rates, because private forest owners could play a pivotal role in the carbon sequestration potential of forests.     

THE EFFICIENCY OF SEQUESTERING CARBON IN AGRICULTURAL SOILS

Agricultural tillage practices are important human-induced activities that can alter carbon emissions from agricultural soils and have the potential to contribute significantly to reductions in greenhouse gas emission (Lal et al., The Potential of U.S. Cropland, 1998). This research investigates the expected costs of sequestering carbon in agricultural soils under different subsidy and market-based policies. Using detailed National Resources Inventory data, we estimate the probability that farmers adopt conservation tillage practices based on a variety of exogenous characteristics and profit from conventional practices. These estimates are used with physical models of carbon sequestration to estimate the subsidy costs of achieving increased carbon sequestration with alternative subsidy schemes.     

Energy substitutions,climate change and carbon sinks

We determine the optimal exploitation time-paths of two energy resources, one being depletable and polluting, namely a fossil fuel, the other being renewable and clean. These optimal paths are considered along with the two following features. First, the cumulative atmospheric pollution stock is set not to exceed some critical threshold and second, the polluting emissions produced by the use of fossil fuel can be reduced at the source and stockpiled in several carbon sinks of limited capacity. We show that, if the renewable resource flow is abundant, the optimal path requires that sequestration is implemented only once the ceiling is reached. Moreover, the reservoirs should be completely filled by increasing order of their respective sequestration costs.     

Energy substitutions, climate change and carbon sinks

We determine the optimal exploitation time-paths of two energy resources, one being depletable and polluting, namely a fossil fuel, the other being renewable and clean. These optimal paths are considered along with the two following features. First, the cumulative atmospheric pollution stock is set not to exceed some critical threshold and second, the polluting emissions produced by the use of fossil fuel can be reduced at the source and stockpiled in several carbon sinks of limited capacity. We show that, if the renewable resource flow is abundant, the optimal path requires that sequestration is implemented only once the ceiling is reached. Moreover, the reservoirs should be completely filled by increasing order of their respective sequestration costs.     

Forest management for timber and carbon sequestration in the presence of climate change: The case of Pinus Sylvestris

Climatic changes will affect the dynamics of a forest ecosystem. Consequently, carbon sequestration costs can only be estimated correctly if changes in climatic conditions are considered. This article determines the changes in mitigation costs of an optimal forest management regime in the presence of climatic changes and varying prices, and takes account of substitution processes between timber production and carbon sequestration at the stand level. The study demonstrates that in the presence of climate change the sequestration costs per ton of carbon increase with higher amounts of carbon sequestered per hectare. This finding can be used to identify a threshold for the amount of sequestered carbon per hectare below which the costs of carbon sequestration are hardly influenced by climate change.     

The marginal cost of carbon abatement from planting street trees in New York City

Urban trees can store carbon through the growth process and reduce fossil fuel use by lowering cooling and heating energy consumption of buildings through the process of transpiration, shading, and the blocking of wind. However, the planting and maintenance of urban trees come at a cost. We estimate the discounted cost of net carbon reductions associated with planting and caring for street trees in New York City (NYC) over 50- and 100-year horizons. Depending on the species planted, the cost of reducing carbon, averaged across planting locations, ranges from $3133 to $8888 per tonne carbon (tC), which is higher than current cost estimates of forest-based carbon sequestration. The London plane tree is the most cost-effective species because of its long life span and large canopy, and the marginal cost of carbon reduction for the species ranges from $1553 to $7396/tC across planting locations. The boroughs of Staten Island and Queens have planting locations with the lowest average costs of carbon reduction ($2657/tC and $2755/tC, respectively), resulting from greater reductions in energy consumption in nearby buildings, which have fewer stories and more residential use than buildings in the other boroughs.     

Expert opinion versus actual transaction evidence in the valuation of non-market amenities

Actual property values are overwhelmingly employed as a dependent variable in hedonic pricing models. Yet, assessed property values are generally more readily available than actual sales values and have, in some studies, been used in lieu of market prices. In this study, we compare estimates of different non-market amenity values based on actual transactions and assessed values. We estimate a Seemingly Unrelated Regression (SUR) model with two hedonic price equations, one with actual market values as the dependent variable and the other with assessed property values, and compare the resulting estimates of shadow prices for open space amenities. We also take into account spatial autocorrelation and combine Method of Moment estimates of the spatial parameters in both equations to create our test statistic. The results indicate that we cannot accept the hypothesis that the impacts of open space on property values are the same for actual sales and assessed values. Moreover, we do observe some differences between the distributions of assessed versus sales values, although the difference between the sizes of open space effects measured within the two equations is rather limited. Thus, while this one study is insufficient to enable one to draw definitive conclusions, there remains the possibility that policy makers cannot reliably base decisions on amenity values obtained from a hedonic model using assessed values.     

Permanence discounting for land-based carbon sequestration

One major concern regarding land-based carbon sequestration involves the issue of permanence. Sequestration may not last forever and may either be released in the future or require expenditures to maintain the practices that keep it sequestered. In this paper, we investigate the differential value of offsets in the face of impermanent characteristics by forming a price discount that equalizes the effective price per ton between a “perfect offset” and one possessing some with impermanent characteristics. We find this discount to be a function of the future needs to replace offsets (in the face of lease expiration quantity or volatilization upon activities such as timber harvest) and the magnitude of any needed maintenance costs. We investigate the magnitude of the discounts under alternative agricultural tillage and forest management cases. In those studies, we find that permanence discounts in the range of 50% are not uncommon. This means that in the market place an impermanent sequestration offset may only receive payments amounting to 50% of the market carbon price. Furthermore, we find that in the face of escalating carbon prices that offsets may prove to be worthless.     

基于“植物功能性状-生态系统服务”评价 框架的园林树种选择方法——以上海为例

园林树木的服务功能直接影响着城市绿地系统和城 市生态系统的健康与稳定。但是，多年以来，园林树种选择机 制和方法却缺少理论支撑，常常具有主观性和随意性。通过上 海50种园林树种“植物功能性状-生态系统服务”评价框架的 构建和17个性状变量因子分析发现，树种功能性状与生态系统 服务之间存在一定的关联性。在形态上，树高决定了树木形态 和树冠大小，对小气候调节、径流调蓄、空气净化和消声减噪 等调节服务具有不同程度的贡献。叶片性状影响固碳释氧，以 及养分供给等生态系统过程，并最终反馈在树种种间服务差异 上。树种的文化服务直接与人类偏好相关，具有复杂性和特殊 性，需要根据实际需求做出权衡与取舍。“植物功能性状-生 态系统服务”评价框架为园林树种的选择和树种规划提供了一 种客观理性的方法，便于针对不同的生态系统服务提供相应的 树种选择依据，以实现城市绿地综合效益的定量化与最优化     

Carbon sequestration and permit trading on the competitive fringe

This paper makes two contributions to the carbon-sequestration policy literature. First and foremost, we develop a theoretical framework in which sequestration and permit-trading markets are analyzed jointly in the context of a competitive fringe model. Our framework formalizes the linkage between regulatory policy changes (as they manifest themselves in the permit market) and subsequent equilibrium allocations in the sequestration market. Second, we perform a numerical analysis demonstrating the role market structure, or market power, might play in the determination of the equilibrium sequestration allocation and carbon price. Both our analytical and numerical results demonstrate the importance of incorporating into empirical supply-side models demand-side information that is reflective of an underlying market structure.     

Restoration of the longleaf pine ecosystem on private lands in the US South: an ecological economic analysis

The longleaf pine ecosystem is one of the most biologically diverse in North America, supporting hundreds of plant and animal species. Because of its timber and many non-timber benefits, there is strong interest among forestry professionals, conservation groups, and the public at large in restoring longleaf pine ecosystems. However, many landowners are reluctant to grow longleaf pine on their lands on a commercial basis because the economic returns from longleaf pine timber production are usually less than those of slash pine. In this study, we develop a model that determines the profitability of longleaf and slash pine timber production after consideration of carbon sequestration, habitat for the endangered red-cockaded woodpecker, and other amenity benefits. Results suggest that internalizing carbon sequestration benefits and red-cockaded woodpecker habitat benefits alone is not enough for landowners to switch from slash pine to longleaf. Additional payments of $16 to 33 per ha per year, reflecting extra amenity benefits associated with longleaf pine relative to slash pine, make longleaf production financially competitive. Incentives that reflect carbon, biodiversity, and amenity benefits associated with longleaf production may be the optimal way of restoring longleaf pine ecosystems on rural private lands in the US South.     

Ecological services to and from rangelands of the United States

The over 300 million ha of public and private rangelands in the United States are characterized by low and variable precipitation, nutrient-poor soils, and high spatial and temporal variability in plant production. This land type has provided a variety of goods and services, with the provisioning of food and fiber dominating through much of the 20th century. More recently, food production from a rangeland-based livestock industry is often pressured for a variety of reasons, including poor economic returns, increased regulations, an aging rural population, and increasingly diverse interests of land owners. A shift to other provisioning, regulating, cultural, and supporting services is occurring with important implications for carbon sequestration, biodiversity, and conservation incentives. There are numerous goods and services possible from rangelands that can supply societal demands such as clean water and a safe food supply. The use of ecologically-based principles of land management remains at the core of the ability of private land owners and public land managers to provide these existing and emerging services. We suggest that expectations need to be based on a thorough understanding of the diverse potentials of these lands and their inherent limits. A critical provisioning service to rangelands will be management practices that either maintain ecological functions or that restore functions to systems that have been substantially degraded over past decades. With proper incentives and economic benefits, rangelands, in the U.S. or globally, can be expected to provide these historical and more unique goods and services in a sustainable fashion, albeit in different proportions than in the past.     

Agricultural landowners⿿ response to incentives for afforestation

Previous research has shown that afforestation of agricultural land is a relatively low-cost option compared to energy-based approaches for mitigating net carbon dioxide emissions, and that financial incentives affect landowner behavior and can be used to increase carbon sequestration on private land. In this paper we use stated preference data from private landowners in the Pacific Northwest region of the U.S. to examine the key factors affecting participation in an incentive program for carbon sequestration through afforestation. We also estimate the corresponding potential for carbon sequestration and its cost. Our results suggest that incentive payments would significantly and positively affect landowners⿿ level of enrollment in a tree planting program.     

Evaluating Temporary Certified Emission Reductions in Reforestation and Afforestation Programs

This article investigates the efficiency of the temporary certified emission reductions (tCERs) system that attempts to internalize the carbon sequestration function of the forest under the Clean Development Mechanism of the Kyoto Protocol. We find that the regulations creating tCERs partially internalize the carbon sequestration function of the forest. The amount of carbon re-released into the atmosphere, due to timber harvest, and sequestered, after the project period, is not internalized in the private landowner’s decision, which induces shorter rotation intervals than socially optimal. Furthermore, the carbon sequestered during the project is over-credited because credits are counted based on accumulated carbon instead of marginally sequestered carbon, which induces longer rotations intervals. Simulation results for the Philippines and Tanzania show that the difference in social welfare between the tCERs system and a socially optimal policy is only about 2% because of the countervailing effect of the inefficiencies on rotation interval choices.