Long Term Versus Temporary Certified Emission Reductions in Forest Carbon-Sequestration Programs

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

No 60744, 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado from Agricultural and Applied Economics Association

Abstract: Under the Clean Development Mechanism (CDM) of the Kyoto Protocol, forest projects can receive returns for carbon sequestration via two credit instruments: temporary (tCERs) or long-term certified emission reductions (lCERs). This article develops a theoretical model of optimal harvesting strategies that compares private optimal harvest decision under these two instruments. We find that risk neutral landowners are likely to prefer instituting lCERs over tCERs to maximize surplus. A particular type of early harvest penalty implemented under the lCERs is critical in determining the length of rotation intervals and the carbon credit supply. When this penalty is an increasing function of the difference in biomass before and after harvesting across verification periods, the landowner may choose longer or shorter rotation intervals compared to the Faustmann rotation. The resulting supply curve may have a backward bending region over a range of carbon prices.

Keywords: Environmental Economics and Policy; Land Economics/Use; Resource/Energy Economics and Policy (search for similar items in EconPapers)
Pages: 37
Date: 2010
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Long-term versus temporary certified emission reductions in forest carbon sequestration programs (2011)
Journal Article: Long‐term versus temporary certified emission reductions in forest carbon sequestration programs (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea10:60744

DOI: 10.22004/ag.econ.60744

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