Carbon Uptake and Forest Management under Uncertainty: Why Natural Disturbance Matters

Gerrit van Kooten, Craig Johnston and Fatemeh Mokhtarzadeh

Journal of Forest Economics, 2019, vol. 34, issue 1-2, 159-185

Abstract: This study examines how natural disturbance can adversely affect the carbon sequestration potential of the forest, and the potential contribution that genomics might make towards offsetting these impacts when carbon is priced. A stochastic dynamic programming model of the BC interior, which includes a detailed carbon accounting module, shows that harvests are delayed as carbon prices rise, with less carbon stored in harvested wood products and more in the forest ecosystem, but an increase in the risk of natural disturbance causes the landowner to harvest sooner. As natural disturbance increases in prevalence and severity, this will somewhat offset the lengthening of rotation age that occurs when carbon is priced. With disturbance, the total amount of carbon sequestered falls significantly, but some of this can be recovered through proactive planting of genetically modified (GM) stems that are more productive and less susceptible to disturbance. To make such an investment worthwhile, however, the costs of planting GM stock should not exceed $120–$150/ha. Finally, this study suggests that a modest price of carbon (somewhat less than $25/tCO2) can be an effective incentive to encourage land owners to reduce the rotation age brought about by disturbance, and generate additional carbon offsets.

Date: 2019
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