Forest-based Carbon Sequestration Research Articles

Optimal Eco-Compensation for Forest-Based Carbon Sequestration Programs: A Case Study of Larch Carbon Sink Plantations in Gansu, Northwest China

This study investigated the potential financial benefits that private forest famers can derive when participating in a larch carbon sink plantation project in the northwestern Chinese province of Gansu. A decision matrix was developed to help forest farmers justify participation in forest carbon sink projects relative to the traditional land-use goal of timber production under various carbon trading prices, site conditions, and contract terms. The results showed that when the carbon trading price is at the theoretically optimal carbon price (CNY 110/tCO2e, equivalent to USD 17/tCO2e), Chinese business entities are willing to pay for forest carbon credits under the current global carbon emissions level, and forest farmers who participate in a 25-year forest carbon sink plantation project on high-productivity sites would generate the greatest financial benefit compared with the net income from pure timber production forests. Thus, the government does not need to provide a carbon sink subsidy for participating tree farmers. However, at the current average carbon trading price (CNY 19.8/tCO2e or USD 3/tCO2e) in the domestic market, a minimum additional subsidy of CNY 735/ha (USD 113/ha) is required upfront to motivate forest farmers to convert timber production forests into carbon sink forests. The results of this study can help policymakers and forest managers formulate optimal eco-compensation strategies for enrollment in forest-based carbon sequestration programs.

The influence of crediting and permanence periods on Australian forest-based carbon offset supply

Governments globally are developing increasingly ambitious carbon emissions reduction schemes that include significant emissions offset credits for forest-based carbon sequestration. Such strategies can present significant challenges in highly modified and intensively farmed regions where forest land use opportunity and establishment costs are high. This article evaluates the economics of land-use change via active afforestation for local carbon abatement in the Australian state of South Australia, a region with high supply costs representative of long-established temperate farming regions. We found that there is no economically viable abatement below $38 tCO2e−1, however up to 154 Mt CO2e of abatement could be available up to prices of $50 tCO2e−1.Variation in current Australian Emissions Reduction Fund (ERF) policy parameters related to permanence and crediting periods were also assessed. Recent ERF contracts involve a 100-year land-use change commitment (permanence period) and a 25-year crediting period where payments for growth in carbon from the land-use change is contracted. We compared outcomes of this arrangement to a scenario with equal 100-year permanence and crediting periods. We found substantial differences in carbon supply at some price points for a 25 rather than a 100-year crediting period. Under ERF parameters the first economically viable revegetation options occur at $42 tCO2e−1, however, we found a 69 percent reduction in economically viable supply at a carbon price of $50 tCO2e−1. The results highlight the role offset crediting policy can have on dis-incentivising land-use change and the need for landholders to be compensated fully for temporal opportunity costs.

Designing cost-efficient payments for forest-based carbon sequestration: An auction-based modeling approach

Conservation auctions can reveal information about the opportunity costs of afforestation, which can be combined with the carbon sequestration benefits of land-use changes to design cost-efficient payment systems. Furthermore, the impact of integrating cost-benefit information to ensure efficiency gains or to ensure minimal efficiency losses in multi-round conservation auctions, where landowners learn to extract information rents, depends on the level of correlation between costs and benefits. Incorporating discriminatory-price auction theory, and an agent-based model, simulated data are used to examine the cost-efficiency of cost-ranked and cost-benefit-ranked auction-based payment designs for forest-based carbon storage for alternative levels of correlation between afforestation opportunity costs and carbon sequestration capacities in static and dynamic settings. Results show that the cost-benefit-ranked design is more cost-efficient than the cost-ranked design in a static setting even though the relative spatial heterogeneities of costs and benefits are identical. More importantly, the cost-efficiency of the cost-benefit-ranked design is generally robust to deterioration as bidders learn over repeated auction rounds, compared with the cost-ranked design, and more resistant to deterioration for some levels of correlation.

Forest-based carbon sequestration, and the role of forward, futures, and carbon-lending markets: A comparative institutions approach

The sequestration of CO2 in forests is often suggested as a means to offset greenhouse gas emissions. New Zealand’s experience suggests the effects of government programmes to provide carbon credits to forest owners could be enhanced if forward markets, futures markets, or carbon-lending markets were used to manage risks. This paper provides a comparative institutions approach based on the history of commodity markets to argue that carbon lending markets, not forward or futures markets, are likely to be the most convenient form of a forestry carbon market. A carbon lending market will raise the total returns from forestry investments with minimal risks to forest owners, and simultaneously reduce the risks facing other firms contemplating carbon reducing investments. For this reason, governments wishing to include forest sequestration in an Emissions Trading Scheme may wish to encourage the development of a carbon lending market.

Impact of market conditions on the effectiveness of payments for forest-based carbon sequestration

This research analyzes the effects of market conditions on the performance of incentive payment approaches for forest-based carbon sequestration. We develop supply curves for sequestered carbon using the relationship between deforestation for urbanization and the relative returns from forest products and urban uses under two different market conditions. The empirical results for an 18-county case study show that a hypothetical payment system was effective and the marginal cost of carbon sequestration increased with the target level of carbon sequestration during the 2001–2006 real estate upturn, while the same system was ineffective during the 2006–2011 period that included a real estate downturn. Our study is the first to examine the role of temporal changes in market conditions on the performance of incentive payment approaches. Although a first step, our snapshot, static approach shows the value in thinking of the dynamic role of changing market conditions in evaluating incentive payment systems.

Land use and general equilibrium implications of a forest-based carbon sequestration policy in the United States

A comparative static Computable General Equilibrium model was used to assess the impacts of forest-based carbon payments on sequestration, land use, and agricultural commodity prices in the U.S. A modified 2008 regional Social Accounting Matrix, considering land as a heterogeneous factor, was used as the model's main input. The matrix was projected to its 2050 counterpart using capital and labour growth projections. The forest-generated carbon offset sources considered were afforested set-asides, commercial forestry intensification and harvested wood products. A new dataset on regional afforestation carbon uptake rates and costs was used to include afforested set-asides as latent activities. For a carbon offset price of $20/MT CO2, 12% of U.S. annual emissions could be sequestered in 2050. More than half of the additional carbon sequestered (611millionMT CO2), compared to the 2050 baseline, would be attributed to set-asides and composed mainly of softwood forests. High carbon prices would increase land prices resulting in the diversion of 15% and 8% of pasture and cropland to carbon set-asides, respectively, mainly in the Central Plains. The high agricultural land diversion would force activities to intensify production systems driving the prices of beef up by 14% as well as oilseeds and grains by 3% and 4%, respectively.

Nested governance for effective REDD+: Institutional and political arguments

Reducing Emissions from Deforestation and Forest Degradation and Forest Enhancement (REDD+) has become a central focus of global climate change mitigation efforts. Even though the international demand for forest-based carbon sequestration is the key driver of REDD+, forest protection strategies must be implemented on the ground. This cross-scale nature of REDD+ explains why scholars and policy makers increasingly favor nested governance arrangements over either fully centralized or fully decentralized REDD+ governance. The focus of the literature on nested REDD+ governance has mostly been on monitoring, reporting, and verification of carbon emission reductions across sub-national, national, and international levels. We build on Ostrom’s principle of ‘nested enterprises’ to argue that REDD+ must be designed to systematically and formally link national policy reforms with the organization and execution of sub-national (regional and local) forest conservation efforts led by forest users. We also contribute new insights on the political dimensions of nestedness in REDD+, with important roles for inter-community forestry associations and forest rights movements.

Nested governance for effective REDD+: Institutional and political arguments

Reducing Emissions from Deforestation and Forest Degradation and Forest Enhancement (REDD+) has become a central focus of global climate change mitigation efforts. Even though the international demand for forest-based carbon sequestration is the key driver of REDD+, forest protection strategies must be implemented on the ground. This cross-scale nature of REDD+ explains why scholars and policy makers increasingly favor nested governance arrangements over either fully centralized or fully decentralized REDD+ governance. The focus of the literature on nested REDD+ governance has mostly been on monitoring, reporting, and verification of carbon emission reductions across sub-national, national, and international levels. We build on Ostrom’s principle of ‘nested enterprises’ to argue that REDD+ must be designed to systematically and formally link national policy reforms with the organization and execution of sub-national (regional and local) forest conservation efforts led by forest users. We also contribute new insights on the political dimensions of nestedness in REDD+, with important roles for inter-community forestry associations and forest rights movements.

Reforming the EU approach to LULUCF and the climate policy framework

• LULUCF remains under-mobilized in the EU climate policy framework. • We highlight current deficiencies under the Incentive Gap lens. • The full mobilization of forest-based resources requires important changes. • Current Low Carbon Pathways likewise ignore the potential role of forest resources. • Forests can provide improved mitigation potential through negative emissions . We focus on recent progress in reforming the role of forests and other land use in the EU climate policy framework. EU inclusion of LULUCF ( L and U se, L and- U se C hange and F orestry) in the climate policy framework still lags international developments, remaining at odds even with the United Nations Framework Convention on Climate Change's (UNFCCC) Kyoto framework. Though the EU has made some important changes that eclipse even the UNFCCC framework—in particular regarding the inclusion of cropland and grazing land management in mandatory EU-level carbon accounting practices—in other respects the EU has far to go. As part of a strategy for fulfilling emission reduction commitments within the EU burden-sharing agreement, Member states are not permitted to trade either in domestically nor foreign produced forest-based carbon credits. On the other hand, both the EU and the UNFCCC/Kyoto LULUCF frameworks remain distant from an idealized model that could facilitate increased climate change mitigation and a more efficient and balanced use of forest-based resources. Limiting the incorporation of forests in the climate policy framework has significant consequences for the cost and rapidity of emission reductions. Forest potential thus remains under-mobilized for climate change mitigation. In this context, we draw particular attention to the fact that forest-based carbon sequestration's potential contribution to negative emissions represents an important missed opportunity. In the context of ongoing discussions over the EU and UNFCCC's Post-Kyoto frameworks, we propose an all-encompassing LULUCF carbon accounting model incorporating all previously omitted carbon pools and activities, thus weighing LULUCF removals and emissions on a par with emissions from other sectors (industry, the energy sector, end-users). The successful integration of LULUCF into the EU climate policy and carbon-trading frameworks could dovetail neatly with emerging international climate change mitigation efforts.

Mitigating climate change through afforestation: New cost estimates for the United States

We provide new cost estimates for carbon sequestration through afforestation in the U.S. We extend existing studies of carbon sequestration costs in several important ways, while ensuring the transparency of our approach. Our costs estimates have five distinguishing features: (1) we estimate costs for each county in the contiguous U.S., (2) we include afforestation of rangeland, in addition to cropland and pasture, (3) our opportunity cost estimates account for capitalized returns to future development (including associated option values) in addition to returns to agricultural production, (4) we develop a new set of forest establishment costs for each county, and (5) we incorporate data on Holdridge life zones to limit afforestation in locations where temperature and moisture availability prohibit forest growth. We find that at a carbon price of $50/ton, approximately 200 million tons of carbon would be sequestered annually through afforestation. At a price of $100/ton, an additional 100 million tons of carbon would be sequestered each year. Our estimates closely match those in earlier econometric studies for relatively low carbon prices, but diverge at higher carbon prices. Our results indicate a smaller, but still important, role for forest-based carbon sequestration in offsetting U.S. greenhouse gas emissions.

The marginal cost of carbon abatement from planting street trees in New York City

Urban trees can store carbon through the growth process and reduce fossil fuel use by lowering cooling and heating energy consumption of buildings through the process of transpiration, shading, and the blocking of wind. However, the planting and maintenance of urban trees come at a cost. We estimate the discounted cost of net carbon reductions associated with planting and caring for street trees in New York City (NYC) over 50- and 100-year horizons. Depending on the species planted, the cost of reducing carbon, averaged across planting locations, ranges from $3133 to $8888 per tonne carbon (tC), which is higher than current cost estimates of forest-based carbon sequestration. The London plane tree is the most cost-effective species because of its long life span and large canopy, and the marginal cost of carbon reduction for the species ranges from $1553 to $7396/tC across planting locations. The boroughs of Staten Island and Queens have planting locations with the lowest average costs of carbon reduction ($2657/tC and $2755/tC, respectively), resulting from greater reductions in energy consumption in nearby buildings, which have fewer stories and more residential use than buildings in the other boroughs.

Afforestation and timber management compliance strategies in climate policy. A computable general equilibrium analysis

This paper analyzes the role of forest-based carbon sequestration in a unilateral EU27 emissions reduction policy under a Global Computable General Equilibrium (CGE) framework. Forestry mitigation is introduced into the model relying on carbon sequestration curves provided by a global forestry model. The structure of the original CGE is extended to consider land use change and timber supply effects, resulting from the use of forest sinks to reduce carbon emissions. Results show that afforestation and timber management could lead to substantially lower policy costs. By using forest-carbon sinks it is possible to achieve the 30% emissions reduction target with an additional European effort of only 0.2% of GDP compared with the cost of a 20% emissions reduction without forestry. Carbon price is also reduced, by approximately 30% in 2020. European forest-carbon sequestration may have, however, the perverse effect of increasing timber production in areas of the world which already have high deforestation rates. A sensitivity analysis on main parameters confirms the robustness of our results.

Foresters' Perceptions of Family Forest Owner Willingness to Participate in Forest Carbon Markets

Abstract Payment for forest-based carbon sequestration may be an emerging opportunity to help mitigate climate change while creating new income streams for forest landowners. It is important to understand families' willingness to participate in emerging carbon markets, as they own 35% of the nation's forestlands. Most family forest owners have not enrolled in forest stewardship programs, suggesting that it may be difficult for them to participate in emerging carbon offset markets. The pilot study reported in this article sought to understand family forest owner willingness to participate in carbon sequestration projects by asking professional foresters who are members of the Forest Guild what they believed would influence family forest owner willingness to participate in sequestration projects and how projects could be designed to foster participation. These foresters identified profitability, compliance difficulties, immaturity of carbon markets, property rights infringements, moral objections to carbon markets, and forester hesitation in recommending participation as the principal barriers to participation. They suggested that barriers could be overcome by increasing profitability, creating low cost and low hassle compliance systems, addressing landowner property rights concerns, and implementing education campaigns aimed at increasing forester knowledge of carbon markets and sequestration projects.

Climate Change Mitigation through Forest-Based Carbon Sequestration Projects in China: Potential Benefits and Challenges

The CDM-AR project is a market-oriented approach to absorb carbon dioxide through afforestation and reforestation according to the Kyoto Protocol. This paper analysised the status of the CDM-AR projects in China, and asked why there are so few CDM-AR projects in China even in the world? The reasons include: Financial constraints, Constraints associated with knowledge, skills and other social factors. The particular reasons for China include: the specific terrains and soil fertility in China, the ownership of the forest land and so on. The CDM-AR project which can offer many economic, social and environmental benefits, is at the initial stage. It has great potential. The potentials of the CDM-AR project include: introduction of foreign capital and advanced technology from developed countries; establish of the forest ecological compensation mechanism in China; lower cost than the cutting emission ways at home for the developed countries.

Loss of carbon sequestration potential after several decades of shifting cultivation in the Southern Yucatán

Cumulative losses from shifting cultivation in the tropics can affect the local to regional to global balance of carbon and nutrient cycles. We determined whether shifting cultivation in the Southern Yucatán causes feedbacks that limit future forest productivity and carbon sequestration potential. Specifically, we tested how the recovery of carbon stocks changes with each additional cultivation-fallow cycle. Live aboveground biomass, coarse woody debris, fine woody debris, forest floor litter and soil were sampled in 53 sites (39 secondary forests 2–25 years old, with one to four cultivation-fallow cycles, and 14 mature forests) along a precipitation gradient in Campeche and Quintana Roo, Mexico. From the first to the third or fourth cultivation-fallow cycle, mean carbon stocks in live aboveground biomass debris declined 64%. From the first to the third cycle, coarse woody debris declined by 85%. Despite declining inputs to soil with each cultivation-fallow cycle, soil carbon stocks did not further decline after the initial conversion from mature to secondary forest. The combined aboveground and soil carbon stock declined almost 36% after conversion from mature forest, however two additional cultivation cycles did not promote further significant decline, largely because of the stability of the soil carbon pool. Although age was the dominant factor in predicting total carbon stocks of secondary forests under shifting cultivation, the number of cultivation-fallow cycles should not be neglected. Understanding change beyond the first cycle of deforestation will enhance forest management at a local scale by improving predictions of secondary forest productivity and related agricultural productivity. A multi-cycle approach to deforestation is critical for regional and national evaluation of forest-based carbon sequestration. Finally, models of the global carbon cycle can be better constrained with more accurate quantification of carbon fluxes from land-use change.

Policy Alternatives to Increase the Demand for Forest-Based Carbon Sequestration

Summary National, regional, and international actors can use a range of different policies to increase the demand for forest-based carbon sequestration. Demand for these services has the potential to significantly impact the decisions of landowners, land managers, and private investors by increasing the incentives for creation or maintenance of forest ecosystems. The Kyoto process is at the center of discussions regarding the market for carbon services although it is not the only relevant source of demand. The authors recommend an approach to climate change regulation that requires actions beyond the current scope and term of the Kyoto Protocol. The four areas addressed in this paper are: (1) increasing regulation-based demand for carbon reductions by improved implementation and increasing coverage, (2) increasing voluntary demand for carbon reductions, (3) increasing the percentage of carbon reduction that derives from land use, land use change, and forestry, and (4) ways to stimulate demand for forest-based carbon sequestration generally by reducing transaction costs and contractual risks and in a particular country by recommending policy changes in Panama.

Land-use change and carbon sinks: Econometric estimation of the carbon sequestration supply function

If the United States chooses to implement a greenhouse gas reduction program, it would be necessary to decide whether to include carbon sequestration policies—such as those that promote forestation and discourage deforestation—as part of the domestic portfolio of compliance activities. We investigate the cost of forest-based carbon sequestration by analyzing econometrically micro-data on revealed landowner preferences, modeling six major private land uses in a comprehensive analysis of the contiguous United States. The econometric estimates are used to simulate landowner responses to sequestration policies. We treat key commodity prices as endogenous and predict carbon storage changes with a carbon sink model. Our estimated sequestration costs exceed those from previous engineering cost analyses and sectoral optimization models. Our estimated sequestration supply function is similar to the carbon abatement supply function from energy-based analyses, suggesting that forest-based carbon sequestration merits consideration in a cost-effective portfolio of domestic US climate change strategies.

Land-Use Change and Carbon Sinks: Econometric Estimation of the Carbon Sequestration Supply Function

When and if the United States chooses to implement a greenhouse gas reduction program, it will be necessary to decide whether carbon sequestration policies - such as those that promote forestation and discourage deforestation - should be part of the domestic portfolio of compliance activities. We investigate the cost of forest-based carbon sequestration. In contrast with previous approaches, we econometrically examine micro-data on revealed landowner preferences, modeling six major private land uses in a comprehensive analysis of the contiguous United States. The econometric estimates are used to simulate landowner responses to sequestration policies. Key commodity prices are treated as endogenous and a carbon sink model is used to predict changes in carbon storage. Our estimated marginal costs of carbon sequestration are greater than those from previous engineering cost analyses and sectoral optimization models. Our estimated sequestration supply function is similar to the carbon abatement supply function from energy-based analyses, suggesting that forest-based carbon sequestration merits inclusion in a cost-effective portfolio of domestic U.S. climate change strategies.