Should forests be used as uncertain carbon sinks or uncertain fossil fuel substitutes in the EU Roadmap to 2050?

Katarina Elofsson and Ing-Marie Gren (ing-marie.gren@slu.se)
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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 2013:8, Working Paper Series from Swedish University of Agricultural Sciences, Department Economics

Abstract: This study investigates the contribution of forest carbon sequestration to a cost-efficient EU climate policy from 2010 to 2050 under conditions of uncertainty. We note that there is a trade-off between sequestration and alternative uses of forests such as bioenergy and timber production. A dynamic and probabilistic cost-minimization model is developed, which includes fossil fuel use within the EU Emissions Trading System and forest management in the EU-27 countries. The results suggest that if policy makers wish to meet emissions targets with 80% certainty, this goal will be eight times more expensive than when they were unconcerned with uncertainty. Policy makers’ risk attitudes affect forest management strategy primarily through the inclusion of wood products, where potential carbon emissions reductions are high but also highly uncertain. Excluding wood products from a climate strategy can be expensive if policy maker are insensitive to uncertainty.

Keywords: uncertainty; carbon sequestration; bioenergy; wood products; climate policy; cost-efficiency; EU. (search for similar items in EconPapers)
JEL-codes: Q23 Q28 Q48 Q54 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2013-09-12
New Economics Papers: this item is included in nep-agr, nep-ene, nep-env and nep-res
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:slueko:2013_008

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