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Effect of Carbon Taxes and Subsidies on Optimal Forest Rotation Age and Supply of Carbon Services

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  • G. Cornelis van Kooten
  • Clark S. Binkley
  • Gregg Delcourt

Abstract

Carbon taxes and subsidies will affect the optimal forest rotation and, consequently, the carbon stored in forests. Unlike the Hartman rotation, where externality benefits are a function of the volume of timber growing on a site at any time, carbon benefits are a function of the change in biomass. Theoretical and empirical results (for coastal British Columbia and northern Alberta) indicate that, under some tax regimes, it may be socially optimal never to harvest the trees. In general, inclusion of the external benefits from carbon uptake results in rotation ages only a bit longer than the financial (Faustmann) rotation age.

Suggested Citation

  • G. Cornelis van Kooten & Clark S. Binkley & Gregg Delcourt, 1995. "Effect of Carbon Taxes and Subsidies on Optimal Forest Rotation Age and Supply of Carbon Services," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 77(2), pages 365-374.
  • Handle: RePEc:oup:ajagec:v:77:y:1995:i:2:p:365-374.
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