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Emission Prices, Biomass, and Biodiversity in Tropical Forests

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  • Lars Peter Hansen
  • José A. Scheinkman

Abstract

We investigate how external emission prices influence robustly optimal reforestation in the Brazilian Amazon and the biodiversity impacts. Extending the findings of Assuncao et al. (2023), we revisit their spatial-dynamic model of land allocation under uncertainty. Their analysis reveals that financial transfers of $25 per ton of CO2e can shift the Amazon from emitting 17 gigatons of CO2e to capturing 18 gigatons over 30 years. Our study expands this work by integrating scientific insights to evaluate biodiversity outcomes, highlighting the broader ecological benefits of emission pricing as a mechanism for achieving both carbon sequestration and biodiversity conservation.

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  • Lars Peter Hansen & José A. Scheinkman, 2025. "Emission Prices, Biomass, and Biodiversity in Tropical Forests," AEA Papers and Proceedings, American Economic Association, vol. 115, pages 391-396, May.
    • Handle: RePEc:aea:apandp:v:115:y:2025:p:391-96
    DOI: 10.1257/pandp.20251071
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    1. Sarah R. Weiskopf & Forest Isbell & Maria Isabel Arce-Plata & Moreno Di Marco & Mike Harfoot & Justin Johnson & Susannah B. Lerman & Brian W. Miller & Toni Lyn Morelli & Akira S. Mori & Ensheng Weng &, 2024. "Biodiversity loss reduces global terrestrial carbon storage," Nature Communications, Nature, vol. 15(1), pages 1-12, December.
    2. Martin L. Weitzman, 1998. "The Noah's Ark Problem," Econometrica, Econometric Society, vol. 66(6), pages 1279-1298, November.
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    More about this item

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q23 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Forestry
    • Q24 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Land
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q57 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Ecological Economics

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