Mechanism Analysis of Applying Blockchain Technology to Forestry Carbon Sink Projects Based on the Differential Game Model

Rui Sun,Dayi He,Jingjing Yan,Li Tao

doi:10.3390/su132111697

Rui Sun, Dayi He + Show 2 more

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https://doi.org/10.3390/su132111697

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Journal: Sustainability	Publication Date: Oct 22, 2021
Citations: 10	License type: CC BY 4.0

Affiliation: China University of Geosciences (Beijing)

Abstract

As an important way to reduce emission, forestry carbon sink (FCS) has not been implemented effectively. Therefore, this paper aims to analyze the effectiveness and mechanism of applying blockchain technology in FCS projects by utilizing the differential game model. A Stackelberg differential game model between forest farmers and emission-controlled enterprises (ECEs) is developed to analyze the optimal emission reduction efforts and the optimal trajectory of forest farmers and ECEs before and after introducing blockchain technology. It is found that: (1) At the initial stage of the utilization of blockchain technology, if blockchain technology takes a leading role in stabilizing carbon prices, the ECEs prefer to purchase FCS instead of reducing emissions by their own technology. On the contrary, if blockchain technology takes a leading role in stimulating the vitality of the carbon trading market, ECEs tend to use emission abatement technology to meet the carbon quote requirements. (2) In the later stage, the incentive and stabilizing effects of blockchain technology on carbon prices tend to be balanced, and the emission reduction efforts of ECEs are lower than the efforts before applying blockchain technology. (3) The application of blockchain technology increases forest farmers’ willingness to reduce emissions because of its effection of cost reduction and efficiency improvement. Meanwhile, blockchain technology reduces abatement costs by influencing carbon prices. Therefore, blockchain technology improves forest farmers’ emission reduction efforts on the whole.

Highlights

Published: 22 October 2021The annual report released by the United Nations in 2019 pointed out that the world needs to take more emission reduction measures to achieve carbon neutrality
In order to show the role of blockchain technology in forestry carbon sink (FCS) trading, we compared the emission reduction efforts of forest farmers and emission-controlled enterprises (ECEs) before and after the introduction of blockchain technology
At the initial stage of the utilization of blockchain technology, it needs to be integrated with the market effectively, and through continuous adjustments to adapt to the law of market development [39]

Summary

Introduction

Published: 22 October 2021The annual report released by the United Nations in 2019 pointed out that the world needs to take more emission reduction measures to achieve carbon neutrality. The international organization attaches great importance to the role of forestry carbon sink (FCS) in tackling climate change. More and more countries have included FCS in the carbon market system and identified FCS projects that produce FCS in the form of legal provisions. In 2001, the 7th Conference of the Parties (COP7) to the United Nations Framework Convention on Climate Change reached the Marrakesh Agreement and agreed to use afforestation and reforestation projects as CDM in the forestry sector; In 2007, COP13 accepted the Bali Road. In December 2015, the United Nations Climate. Conference included forestry as a separate clause in the newly reached Paris Agreement, clearly stipulating that after 2020, countries should take actions to protect and enhance.

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