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Climate Change and Forest Sinks: Factors Affecting the Costs of Carbon Sequestration

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  • Newell, Richard G.
  • Stavins, Robert N.

Abstract

The possibility of encouraging the growth of forests as a means of sequestering carbon dioxide has received considerable attention because of concerns about the threat of global climate change due to the greenhouse effect. In fact, this approach is an explicit element of both U.S. and international climate policies, partly because of evidence that growing trees to sequester carbon can be a relatively inexpensive means of combating climate change. But how sensitive are such estimates to specific conditions? We examine the sensitivity of carbon sequestration costs to changes in critical factors, including the nature of the management and deforestation regimes, silvicultural species, agricultural prices, and discount rates. We find, somewhat counter-intuitively, that the costs of carbon sequestration can be greater if trees are periodically harvested, rather than permanently established. In addition, higher discount rates imply higher marginal costs, and they imply non-monotonic changes in the amount of carbon sequestered. Importantly, retarded deforestation can sequester carbon at substantially lower costs than increased forestation. These results depend in part on the time profile of sequestration and the amount of carbon released upon harvest, both of which may vary by species, geographic location, and management regime, and are subject to scientific uncertainty.
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  • Newell, Richard G. & Stavins, Robert N., 2000. "Climate Change and Forest Sinks: Factors Affecting the Costs of Carbon Sequestration," Journal of Environmental Economics and Management, Elsevier, vol. 40(3), pages 211-235, November.
  • Handle: RePEc:eee:jeeman:v:40:y:2000:i:3:p:211-235
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    1. Stavins, Robert, 2004. "Environmental Economics," Discussion Papers dp-04-54, Resources For the Future.
    2. RICHARD M. Adams & DARIUS M. Adams & JOHN M. Callaway & CHING-CHENG Chang & BRUCE A. Mccarl, 1993. "Sequestering Carbon On Agricultural Land: Social Cost And Impacts On Timber Markets," Contemporary Economic Policy, Western Economic Association International, vol. 11(1), pages 76-87, January.
    3. Stavins, Robert N., 1990. "Alternative renewable resource strategies: A simulation of optimal use," Journal of Environmental Economics and Management, Elsevier, vol. 19(2), pages 143-159, September.
    4. Robert N. Stavins, 1999. "The Costs of Carbon Sequestration: A Revealed-Preference Approach," American Economic Review, American Economic Association, vol. 89(4), pages 994-1009, September.
    5. Peter J. Parks & Ian W. Hardie, 1995. "Least-Cost Forest Carbon Reserves: Cost-Effective Subsidies to Convert Marginal Agricultural Land to Forests," Land Economics, University of Wisconsin Press, vol. 71(1), pages 122-136.
    6. William D. Nordhaus, 1991. "The Cost of Slowing Climate Change: a Survey," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 37-66.
    7. Ralph Alig & Darius Adams & Bruce McCarl & J. Callaway & Steven Winnett, 1997. "Assessing effects of mitigation strategies for global climate change with an intertemporal model of the U.S. forest and agriculture sectors," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 9(3), pages 259-274, April.
    8. J. Callaway & Bruce McCarl, 1996. "The economic consequences of substituting carbon payments for crop subsidies in U.S. agriculture," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 7(1), pages 15-43, January.
    9. G. Cornelis van Kooten & Louise M. Arthur & W. R. Wilson, 1992. "Potential to Sequester Carbon in Canadian Forests: Some Economic Considerations," Canadian Public Policy, University of Toronto Press, vol. 18(2), pages 127-138, June.
    10. Stavins, Robert N & Jaffe, Adam B, 1990. "Unintended Impacts of Public Investments on Private Decisions: The Depletion of Forested Wetlands," American Economic Review, American Economic Association, vol. 80(3), pages 337-352, June.
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