Faustmann and the climate

Michael Hoel (), Bjart Holtsmark and Katinka Holtsmark

Journal of Forest Economics, 2014, vol. 20, issue 2, 192-210

Abstract: The paper presents an adjusted Faustmann Rule for optimal harvest of a forest when there is a social cost of carbon emissions. The theoretical framework takes account of the dynamics and interactions of forests’ multiple carbon pools and assumes an infinite time horizon. Our paper provides a theoretical foundation for numerical model studies that have found that a social cost of carbon implies longer optimal rotation periods and that if the social cost of carbon exceeds a certain threshold value the forest should not be harvested. At the same time we show that it could be a net social benefit from harvesting even if the commercial profit from harvest is negative. If that is the case, the optimal harvest age is decreasing in the social cost of carbon.

Keywords: Climate; Forestry; Biofuels; Faustmann; Rotation length; Social cost of carbon (search for similar items in EconPapers)
JEL-codes: Q23 Q42 Q54 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Related works:
Working Paper: Faustmann and the Climate (2012)
Working Paper: Faustmann and the Climate (2012)
Working Paper: Faustmann and the Climate (2012)
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DOI: 10.1016/j.jfe.2014.04.003

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