Abstract
Carbon leakage can be a problem when seeking to reduce carbon emissions through forest policy. International market leakage is mainly caused by supply and demand imbalances in the timber market. This paper selects China, which is implementing forestry policy changes, as the research object. We begin by offering a brief analysis of China’s forestry policy changes, such as the logging quota and Six Key Forestry Programs to determine whether those policies affect timber supply. Second, through the use of three shock variables, carbon leakage is simulated under different scenarios by the Global Trade Analysis Project (GTAP) model. The results reveal that the magnitude of leakage caused by implementing China’s forestry policies is between 79.7% and 88.8% with carbon leakage mainly displaced to Russia, Southeast Asia, and the EU. Two effective scenarios for reducing market leakage are presented: forest tenure reform and fast growing forest projects to improve domestic timber production, and raising tariffs on timber imports to reduce imports.
Highlights
Forests can play a critical role in addressing climate change
Considering the effect of China’s forestry policy on leakage, this paper examines three exogenous shock variables: (i) logging quota policy and logging bans/limits, policies on harvesting natural forests leading to a 10% reduction in the supply of timber [16]; (ii) tenure reform of collectively owned forests and fast growing trees program resulting in a timber supply increase of 5% [24]; and (iii) increases in timber import tariffs of 5%
When Chinese timber production was reduced by 10% and 5%, the price of international timber increased at almost the same pace, while the production of international timber decreased by only 0.67% and 0.29%, respectively (Table 4)
Summary
Forests can play a critical role in addressing climate change. 17.4% of the annual global carbon dioxide emissions are caused by deforestation and forest degradation, placing the potential contribution of forest loss to climate change above that of the transportation and industrial sectors. It will be impossible to solve the climate change problem without addressing these emissions [1]. Forests remove carbon from the atmosphere and release oxygen through photosynthesis, and they can sequester carbon both in their biomass and soils. Forests are the world’s most important terrestrial carbon “sink”, or storehouse of carbon [2]. International organizations, nations, and scientists are looking for a way to more effectively mitigate climate change through forest growth and carbon sequestration
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