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Economic Analysis of Carbon Sequestration under Risks in Forest management

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  • Hu, Lijiao
  • Stainback, George
  • Li, Xiaoshu

Abstract

Internalizing carbon value for forest landowners has the potential to increase carbon supply in forests and mitigate CO2 in the atmosphere. In this study, we developed a modified Hartman model to investigate how payments of carbon offsets impact the optimal management of hardwood forests in Kentucky considering price uncertainty and the risk of catastrophic events such as fire or storm damage. An Expected Value (E-V) model was used to conduct a sensitivity analysis of landowner aversion to price uncertainty. Best management strategies were examined to achieve maximized financial return for landowners in the face of both catastrophic risk and price variability.

Suggested Citation

  • Hu, Lijiao & Stainback, George & Li, Xiaoshu, 2016. "Economic Analysis of Carbon Sequestration under Risks in Forest management," 2016 Annual Meeting, February 6-9, 2016, San Antonio, Texas 229983, Southern Agricultural Economics Association.
    • Handle: RePEc:ags:saea16:229983
    DOI: 10.22004/ag.econ.229983
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