Impact of cost assumptions on forest carbon targets and supply dynamics

Seong-Hoon Cho and James C. Mingie

Forest Policy and Economics, 2025, vol. 172, issue C

Abstract: Including both explicit and opportunity costs in valuing ecosystem services offers a comprehensive economic assessment, but practical applications often focus on explicit costs alone. This study examines the evolution of spatial targets and supply dynamics for forest carbon in the Central and Southern Appalachian Region, transitioning from a solely explicit-cost approach to one incorporating weighted opportunity costs. We calculate opportunity cost weights by analyzing development pressure at the pixel level, where each pixel's forest conversion rate—estimated as the anticipated shift from forest to urban land use—serves as an index for local development pressure. These weights range from zero (no development pressure) to one (full development pressure), with higher weights assigned to areas facing greater likelihoods of conversion. This approach provides flexibility in estimating opportunity costs based on localized economic pressures. Our findings indicate that incorporating opportunity costs significantly affects forest carbon supply dynamics, with higher development pressures leading to increased costs and reduced potential for carbon storage. By applying weighted opportunity costs, however, the financial burden is moderated, supporting a balance between carbon storage goals and economic considerations. These findings suggest that forest conservation programs would benefit from regionally adjusted incentives, especially in development-prone areas where high opportunity costs might deter landowners from participating. By prioritizing regions with critical carbon storage potential and high conversion risk, conservation policies could maximize environmental impact and economic efficiency across the Appalachian landscape. This approach offers a pathway for conservation policies that support carbon sequestration objectives while acknowledging economic trade-offs.

Keywords: Carbon supply; Forestry; Opportunity cost; Ecosystem valuation (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:forpol:v:172:y:2025:i:c:s1389934125000292

DOI: 10.1016/j.forpol.2025.103450

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