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Economics of Forest Ecosystem Carbon Sinks: A Review

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  • van Kooten, G. Cornelis
  • Sohngen, Brent

Abstract

Carbon terrestrial sinks are seen as a low-cost alternative to fuel switching and reduced fossil fuel use for lowering atmospheric CO 2. In this study, we review issues related to the use of terrestrial forestry activities to create CO 2 offset credits. To gain a deeper understanding of the confusing empirical studies of forest projects to create carbon credits under Kyoto, we employ meta-regression analysis to analyze conditions under which forest activities generate CO 2-emission reduction offsets at competitive "prices." In particular, we examine 68 studies of the costs of creating carbon offsets using forestry. Baseline estimates of costs of sequestering carbon are some US$3–$280 per tCO 2, indicating that the costs of creating CO 2-emission offset credits through forestry activities vary wildly. Intensive plantations in the tropics could potentially yield positive benefits to society, but in Europe similar projects could cost as much as $195/tCO 2. Indeed, Europe is the highest cost region, with costs in the range of $50–$280 per tCO 2. This might explain why Europe has generally opposed biological sinks as a substitute for emissions reductions, while countries rush to finance forestry sector clean development mechanism projects. In Canada and the U.S., carbon sequestration costs range from a low of about $2 to nearly $80 per tCO 2. One conclusion is obvious: some forestry projects to sequester carbon are worthwhile undertaking, but certainly not all.

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File URL: http://dx.doi.org/10.1561/101.00000006
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Bibliographic Info

Article provided by now publishers in its journal International Review of Environmental and Resource Economics.

Volume (Year): 1 (2007)
Issue (Month): 3 (September)
Pages: 237-269

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Handle: RePEc:now:jirere:101.00000006

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Web page: http://www.nowpublishers.com/

Related research

Keywords: Climate change; Kyoto Protocol; Meta-regression analysis; Carbon-uptake costs; Forest sinks;

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Cited by:
  1. Kim, Yoon Hyung & Sohngen, Brent & Golub, Alla A. & Hertel, Thomas W. & Rose, Steven K., 2010. "Impact Of Us And European Biofuel Policies On Forest Carbon," 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado 61456, Agricultural and Applied Economics Association.
  2. Kerstin Güssow & Alexander Proelss & Andreas Oschlies & Katrin Rehdanz & Wilfried Rickels, 2009. "Ocean iron fertilization: Why further research is needed," Kiel Working Papers 1574, Kiel Institute for the World Economy.
  3. Pajot, Guillaume, 2011. "Rewarding carbon sequestration in South-Western French forests: A costly operation?," Journal of Forest Economics, Elsevier, vol. 17(4), pages 363-377.
  4. Renan Ulrich Goetz & Natali Hritonenko & Ruben Mur & Àngels Xabadia & Yuri Yatsenko, 2008. "Climate Change and the Cost of Carbon Sequestration: The Case of Forest Management," Working Papers 329, Barcelona Graduate School of Economics.
  5. G. Cornelis van Kooten, 2008. "Biological Carbon Sequestration and Carbon Trading Re-visited," Working Papers 2008-04, University of Victoria, Department of Economics, Resource Economics and Policy Analysis Research Group.
  6. Maria Nijnik & Guillaume Pajot, 2014. "Accounting for uncertainties and time preference in economic analysis of tackling climate change through forestry and selected policy implications for Scotland and Ukraine," Climatic Change, Springer, vol. 124(3), pages 677-690, June.
  7. Ovando, Paola & Caparrós, Alejandro, 2009. "Land use and carbon mitigation in Europe: A survey of the potentials of different alternatives," Energy Policy, Elsevier, vol. 37(3), pages 992-1003, March.
  8. Gregmar Galinato & Shinsuke Uchida, 2010. "Evaluating Temporary Certified Emission Reductions in Reforestation and Afforestation Programs," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 46(1), pages 111-133, May.
  9. Jaeger, William K. & Egelkraut, Thorsten M., 2011. "Biofuel economics in a setting of multiple objectives and unintended consequences," Renewable and Sustainable Energy Reviews, Elsevier, vol. 15(9), pages 4320-4333.
  10. Wilfried Rickels & Katrin Rehdanz & Andreas Oschlies, 2009. "Economics prospects of ocean iron fertilization in an international carbon market," Kiel Working Papers 1573, Kiel Institute for the World Economy.
  11. Rickels, Wilfried & Rehdanz, Katrin & Oschlies, Andreas, 2010. "Methods for greenhouse gas offset accounting: A case study of ocean iron fertilization," Ecological Economics, Elsevier, vol. 69(12), pages 2495-2509, October.
  12. Wilfried Rickels & Katrin Rehdanz & Andreas Oschlies, 2009. "Accounting aspects of ocean iron fertilization," Kiel Working Papers 1572, Kiel Institute for the World Economy.

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