Long-term versus temporary certified emission reductions in forest carbon sequestration programs

Gregmar Galinato (), Aaron Olanie, Shinsuke Uchida and Jonathan K. Yoder

Australian Journal of Agricultural and Resource Economics, 2011, vol. 55, issue 4, 23

Abstract: Under the Clean Development Mechanism (CDM) of the Kyoto Protocol, forest projects can receive returns for carbon sequestration via two crediting instruments: temporary or long-term certified emission reductions (tCERs or lCERs). This study shows the effect of lCERs on the private owner’s forest rotation intervals decision and carbon credit generation in afforestation and reforestation projects. A credit verification mechanism with a harvest penalty implemented under the lCERs policy distorts the timber harvesting decision and the corresponding carbon credit supply. Two opposing incentives are created by the lCERs mechanism which leads to either longer or shorter rotations compared to the Faustmann rotation, depending on which incentive prevails. Our numerical results show that both lCERs and tCERs seem to have similar impacts on harvesting incentives, but the resulting carbon supply differs among the instruments owing to the credit verification mechanism. The tCERs carbon supply curve is monotonically increasing in the carbon price, while a lCERs carbon supply is non-monotonic and may have a backward bending region over a range of carbon prices.

Keywords: Environmental Economics and Policy; Land Economics/Use (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Long‐term versus temporary certified emission reductions in forest carbon sequestration programs (2011)
Working Paper: Long Term Versus Temporary Certified Emission Reductions in Forest Carbon-Sequestration Programs (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aareaj:197004

DOI: 10.22004/ag.econ.197004

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