Costs and fairness of forest carbon sequestration in EU climate policy

Miriam Munnich Vass (), Katarina Elofsson and Ing-Marie Gren
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Miriam Munnich Vass: Department of Economics, Swedish University of Agricultural Sciences, Postal: Department of Economics, Box 7013, Swedish University of Agricultural Sciences, SE-750 07 Uppsala, Sweden
Ing-Marie Gren: Department of Economics, Swedish University of Agricultural Sciences, Postal: Department of Economics, Box 7013, Swedish University of Agricultural Sciences, SE-750 07 Uppsala, Sweden

No 2013:5, Working Paper Series from Swedish University of Agricultural Sciences, Department Economics

Abstract: Large emissions of greenhouse gases are expected to cause major environmental problems in the future. European policy makers have therefore declared that they aim to implement cost-efficient and fair policies to reduce carbon emissions. The purpose of this paper is to assess whether the cost of the EU policies for 2020 can be reduced through the inclusion of carbon sequestration as and abatement option while also equity is improved. The assessment is done by numerical calculations using a chance-constrained partial equilibrium model of the EU Emissions Trading Scheme and national effort-sharing targets, where forest sequestration is introduced as an uncertain abatement option. Fairness is evaluated by calculation of Gini-coefficients for six equity criteria to policy outcomes. The estimated Gini-coefficients range between 0.11 and 0.32 for the current policy, between 0.16 and 0.66 if sequestration is included and treated as certain, and between 0.19 and 0.38 when uncertainty about sequestration is taken into account and policy-makers wish to meet targets with at least 90 percent probability. The results show that fairness is reduced when sequestration is included and that the impact is larger when sequestration is treated as certain.

Keywords: carbon sequestration; costs; fairness; EU climate policy (search for similar items in EconPapers)
JEL-codes: D63 Q48 Q52 Q58 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2013-05-03
New Economics Papers: this item is included in nep-agr, nep-env and nep-eur
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Published as Munnich Vass, Miriam, Katarina Elofsson and Ing-Marie Gren, 'An equity assessment of introducing uncertain forest carbon sequestration in the EU climate policy' in Energy Policy, 2013, pages 1432-1442.

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