Assessing the Opportunity Cost of Carbon Stock Caused by Land-Use Changes in Taiwan

Ming-Yun Chu and Wan-Yu Liu
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Ming-Yun Chu: Department of Forestry, National Chung Hsing University, Taichung City 40227, Taiwan

Land, 2021, vol. 10, issue 11, 1-15

Abstract: As compared with conventional approaches for reducing carbon emissions, the strategies of reducing emissions from deforestations and forest degradation (REDD) can greatly reduce costs. Hence, the United Nations Framework Convention on Climate Change regards the REDD strategies as a crucial approach to mitigate climate change. To respond to climate change, Taiwan passed the Greenhouse Gas Reduction and Management Act to control the emissions of greenhouse gases. In 2021, the Taiwan government has announced that it will achieve the carbon neutrality target by 2050. Accordingly, starting with focusing on the carbon sink, the REDD strategies have been considered a recognized and feasible strategy in Taiwan. This study analyzed the net present value and carbon storage for various land-use types to estimate the carbon stock and opportunity cost of land-use changes. When the change of agricultural land to artificial forests generated carbon stock, the opportunity cost of carbon stock was negative. Contrarily, restoring artificial forests (which refer to a kind of forest that is formed through artificial planting, cultivation, and conservation) to agricultural land would generate carbon emissions, but create additional income. Since the opportunity cost of carbon storage needs to be lower than the carbon market price so that landlords have incentives to conduct REDD+, the outcomes of this study can provide a reference for the government to set an appropriate subsidy or price for carbon sinks. It is suggested that the government should offer sufficient incentives to reforest collapsed land, and implement interventions, promote carbon trading policies, or regulate the development of agricultural land so as to maintain artificial broadleaf forests for increased carbon storage.

Keywords: REDD+; net present value (NPV); land-use changes; carbon stock; opportunity cost (search for similar items in EconPapers)
JEL-codes: Q15 Q2 Q24 Q28 Q5 R14 R52 (search for similar items in EconPapers)
Date: 2021
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