This study develops cumulative carbon “supply curves” for global forests utilizing an dynamic timber supply model for sequestration of forest carbon. Because the period of concern is the next century, and particular time points within that century, the curves are not traditional Marshallian supply curves or steady-state supply curves. Rather, the focus is on cumulative carbon cost curves (quasi-supply curves) at various points in time over the next 100 years. The research estimates a number of long-term, cumulative, carbon quasi-supply curves under different price scenarios and for different time periods. The curves trace out the relationship between an intertemporal price path for carbon, as given by carbon shadow prices, and the cumulative carbon sequestered from the initiation of the shadow prices, set at 2000, to a selected future year (2010, 2050, 2100). The timber supply model demonstrates that cumulative carbon quasi-supply curves that can be generated through forestry significantly depend on initial carbon prices and expectations regarding the time profile of future carbon prices. Furthermore, long-run quasi-supply curves generated from a constant price will have somewhat different characteristics from quasi-supply curves generated with an expectation of rising carbon prices through time. The “least-cost” curves vary the time periods under consideration and the time profile of carbon prices. The quasi-supply curves suggest that a policy of gradually increasing carbon prices will generate the least costly supply curves in the shorter periods of a decade or so. Over longer periods of time, however, such as 50 or 100 years, these advantages appear to dissipate.
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Paper provided by Resources For the Future in its series Discussion Papers with number
dp-01-19.
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