Journal of Forest Economics > Vol 19 > Issue 3

Forest carbon benefits, costs and leakage effects of carbon reserve scenarios in the United States

Prakash Nepal, 227 School of Renewable Natural Resources Building, USA, pnepal@fs.fed.us Peter J. Ince, USDA Forest Service, Forest Products Laboratory, USA, pince@fs.fed.us Kenneth E. Skog, USDA Forest Service, Forest Products Laboratory, USA, kskog@fs.fed.us Sun J. Chang, 227 School of Renewable Natural Resources Building, USA, xp2610@lsu.edu
 
Suggested Citation
Prakash Nepal, Peter J. Ince, Kenneth E. Skog and Sun J. Chang (2013), "Forest carbon benefits, costs and leakage effects of carbon reserve scenarios in the United States", Journal of Forest Economics: Vol. 19: No. 3, pp 286-306. http://dx.doi.org/10.1016/j.jfe.2013.06.001

Published: 0/8/2013
© 0 2013 Prakash Nepal, Peter J. Ince, Kenneth E. Skog, Sun J. Chang
 
Subjects
 
Keywords
JEL Codes:C61L73Q23Q54
Forest carbonCarbon reserveCarbon priceCarbon leakageClimate change mitigationMitigation costPresent valueSet asides
 

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In this article:
Introduction
Methods
Results and discussion
Conclusions

Abstract

This study evaluated the potential effectiveness of future carbon reserve scenarios, where U.S. forest landowners would hypothetically be paid to sequester carbon on their timberland and forego timber harvests for 100 years. Scenarios featured direct payments to landowners of $0 (baseline), $5, $10, or $15 per metric ton of additional forest carbon sequestered on the set aside lands, with maximum annual expenditures of $3 billion. Results indicated that from 1513 to 6837 Tg (Teragrams) of additional carbon (as carbon dioxide equivalent, CO2e) would be sequestered on U.S. timberlands relative to the baseline case over the next 50 years (30–137 Tg CO2e annually). These projected amounts of sequestered carbon on timberlands take into account projected increases in timber removal and forest carbon losses on other timberlands (carbon leakage effects). Net effectiveness of carbon reserve scenarios in terms of overall net gain in timberland carbon stocks from 2010 to 2060 ranged from 0.29tCO2e net carbon increase for a payment of $5/tCO2e to the landowner (71% leakage), to 0.15tCO2e net carbon increase for a payment of $15/tCO2e to the landowner (85% leakage). A policy or program to buy carbon credits from landowners would need to discount additions to the carbon reserve by the estimated amount of leakage. In the scenarios evaluated, the timber set-asides reduced timberland area available for harvest up to 35% and available timber inventory up to 55%, relative to the baseline scenario over the next 50 years, resulting in projected changes in timber prices, harvest levels, and forest product revenues for the forest products sector.

DOI:10.1016/j.jfe.2013.06.001