Emission Prices, Biomass, and Biodiversity in Tropical Forests

Lars Peter Hansen and José A. Scheinkman

AEA Papers and Proceedings, 2025, vol. 115, 391-96

Abstract: We investigate how external emission prices influence robustly optimal reforestation in the Brazilian Amazon and the biodiversity impacts. Extending the findings of Assuncao et al. (2023), we revisit their spatial-dynamic model of land allocation under uncertainty. Their analysis reveals that financial transfers of $25 per ton of CO2e can shift the Amazon from emitting 17 gigatons of CO2e to capturing 18 gigatons over 30 years. Our study expands this work by integrating scientific insights to evaluate biodiversity outcomes, highlighting the broader ecological benefits of emission pricing as a mechanism for achieving both carbon sequestration and biodiversity conservation.

JEL-codes: O13 Q23 Q24 Q28 Q54 Q57 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1257/pandp.20251071

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