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Private valuation of carbon sequestration in forest plantations

Adriana Bussoni Guitart and L.C. Estraviz Rodriguez

Ecological Economics, 2010, vol. 69, issue 3, 451-458

Abstract: Approval of the Clean Development Mechanism, provided for in the Kyoto Protocol, enables countries with afforested land to trade in carbon emissions reduction certificates related to carbon dioxide equivalent quantities (CO2-e) stored within a certain forest area. Potential CO2-e above base line sequestration was determined for two forest sites on commercial eucalyptus plantations in northern Brazil (Bahia). Compensation values for silvicultural regimes involving rotation lengths greater than economically optimal were computed using the Faustmann formula. Mean values obtained were US$8.16 (MgCO2-e)-Â 1 and US$7.19 (MgCO2-e)-Â 1 for average and high site indexes, respectively. Results show that carbon supply is more cost-efficient in highly productive sites. Annuities of US$18.8Â Mg C-Â 1 and US$35.1Â Mg C-Â 1 and yearly payments of US$4.4Â m-Â 3 and US$8.2Â m-Â 3 due for each marginal cubic meter produced were computed for high and average sites, respectively. The estimated value of the tonne of carbon defines minimum values to be paid to forest owners, in order to induce a change in silvicultural management regimes. A reduction of carbon supply could be expected as a result of an increase in wood prices, although it would not respond in a regular manner. For both sites, price elasticity of supply was found to be inelastic and increased as rotation length moved further away from economically optimal: 0.24 and 0.27 for age 11Â years in average- and high-productivity sites, respectively. This would be due to biomass production potential as a limiting factor; beyond a certain threshold value, an increase in price does not sustain a proportional change in carbon storage supply. The environmental service valuation model proposed might be adequate for assessing potential supply in plantation forestry, from a private landowner perspective, with an economic opportunity cost. The model is not applicable to low commercial value forest plantations.

Keywords: Eucalyptus; Cost; LEV; Carbon; Supply (search for similar items in EconPapers)
Date: 2010
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Handle: RePEc:eee:ecolec:v:69:y:2010:i:3:p:451-458