Abstract

This paper examines the potential and the cost of promoting forest carbon sequestration through a tax/subsidy to land owners for reducing/increasing carbon storage in their forests. We use a partial equilibrium model based on intertemporal optimization to estimate the impacts of carbon price (the tax/subsidy rate) on timber harvest volume and price in different time periods and on the change of forest carbon stock over time. The results show that a higher carbon price would lead to higher forest carbon stocks. The tax/subsidy induced annual net carbon sequestration is declining over time. The net carbon sequestration during 2015-2050 would increase by 30.2 to 218.3 million tonnes of CO2, when carbon price increases from 170 SEK to 1428 SEK per tonne of CO2. The associated cost, in terms of reduced total benefits of timber and other non-timber goods, ranges from 80 SEK to 105.8 SEK per tonne of CO2. The change in carbon sequestration (as compared with the baseline case) beyond 2050 is small when carbon price is 680 SEK per tonne of CO2 or lower. With a carbon price of 1428 SEK per tonne of CO2, carbon sequestration will increase by 70 million tonnes of CO2 from the baseline level during 2050-2070, and by 64 million tonnes during 2070-2170. (c) 2017 Department of Forest Economics, Swedish University of Agricultural Sciences, Umea. Published by Elsevier GmbH. All rights reserved.

Keywords

Forest sector model; Climate change mitigation; Carbon sequestration; Carbon price; Timber supply

Published in

Journal of Forest Economics
2017, Volume: 29, number: Part B, pages: 78-86
Publisher: ELSEVIER GMBH, URBAN & FISCHER VERLAG

SLU Authors

• Gong, Peichen

  • Department of Forest Economics, Swedish University of Agricultural Sciences
    

• Guo, Jinggang

  • Department of Forest Economics, Swedish University of Agricultural Sciences
    

Sustainable Development Goals

Take urgent action to combat climate change and its impacts


UKÄ Subject classification

Forest Science


Publication identifier

DOI: https://doi.org/10.1016/j.jfe.2017.09.001

Permanent link to this page (URI)

https://res.slu.se/id/publ/93324