Forest carbon benefits, costs and leakage effects of carbon reserve scenarios in the United States

Prakash Nepal, Peter J. Ince, Kenneth E. Skog and Sun J. Chang

Journal of Forest Economics, 2013, vol. 19, issue 3, 286-306

Abstract: This study evaluated the potential effectiveness of future carbon reserve scenarios, where U.S. forest landowners would hypothetically be paid to sequester carbon on their timberland and forego timber harvests for 100 years. Scenarios featured direct payments to landowners of $0 (baseline), $5, $10, or $15 per metric ton of additional forest carbon sequestered on the set aside lands, with maximum annual expenditures of $3 billion. Results indicated that from 1513 to 6837 Tg (Teragrams) of additional carbon (as carbon dioxide equivalent, CO2e) would be sequestered on U.S. timberlands relative to the baseline case over the next 50 years (30–137 Tg CO2e annually). These projected amounts of sequestered carbon on timberlands take into account projected increases in timber removal and forest carbon losses on other timberlands (carbon leakage effects). Net effectiveness of carbon reserve scenarios in terms of overall net gain in timberland carbon stocks from 2010 to 2060 ranged from 0.29tCO2e net carbon increase for a payment of $5/tCO2e to the landowner (71% leakage), to 0.15tCO2e net carbon increase for a payment of $15/tCO2e to the landowner (85% leakage). A policy or program to buy carbon credits from landowners would need to discount additions to the carbon reserve by the estimated amount of leakage. In the scenarios evaluated, the timber set-asides reduced timberland area available for harvest up to 35% and available timber inventory up to 55%, relative to the baseline scenario over the next 50 years, resulting in projected changes in timber prices, harvest levels, and forest product revenues for the forest products sector.

Keywords: Forest carbon; Carbon reserve; Carbon price; Carbon leakage; Climate change mitigation; Mitigation cost; Present value; Set asides (search for similar items in EconPapers)
JEL-codes: C61 L73 Q23 Q54 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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DOI: 10.1016/j.jfe.2013.06.001

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