IDEAS home Printed from https://ideas.repec.org/a/eee/resene/v36y2014i1p151-165.html

The optimal time path for carbon abatement and carbon sequestration under uncertainty: The case of stochastic targeted stock

Author

Listed:
  • Haim, David
  • Plantinga, Andrew J.
  • Thomann, Enrique

Abstract

We explore the optimal time path of carbon sequestration and carbon abatement in stabilizing CO2 levels under uncertainty of climate impacts. Using a two-period sequential decision making model, we analytically derive optimal rates for the two control variables, abatement and sequestration rates. Uncertainty is assumed to affect the desired future stabilization level of the CO2 stock but is resolved prior to the decision on how much to control the stock in the second period. Contrary to recent numerical studies, we find that uncertainty can make it optimal to use carbon sequestration either earlier or later depending on the relative rates of change in both marginal cost curves and on the amount of land that can be converted to forest. Comparative statics suggest that an increase in the discount factor could either increase or decrease the optimal rate of sequestration in the first period depending on the expected rate of change of the marginal cost of sequestration in the second period and on future benefits of current sequestration.

Suggested Citation

  • Haim, David & Plantinga, Andrew J. & Thomann, Enrique, 2014. "The optimal time path for carbon abatement and carbon sequestration under uncertainty: The case of stochastic targeted stock," Resource and Energy Economics, Elsevier, vol. 36(1), pages 151-165.
    • Handle: RePEc:eee:resene:v:36:y:2014:i:1:p:151-165
    DOI: 10.1016/j.reseneeco.2013.11.006
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S092876551300081X
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.reseneeco.2013.11.006?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. repec:aen:journl:2006v27-03-a07 is not listed on IDEAS
    2. Feng, Hongli & Zhao, Jinhua & Kling, Catherine L., 2002. "Time Path and Implementation of Carbon Sequestration (The)," Staff General Research Papers Archive 5068, Iowa State University, Department of Economics.
    3. Vincent Gitz & Jean-Charles Hourcade & Philippe Ciais, 2006. "The Timing of Biological Carbon Sequestration and Carbon Abatement in the Energy Sector Under Optimal Strategies Against Climate Risks," The Energy Journal, , vol. 27(3), pages 113-134, July.
    4. repec:aen:journl:2002v23-02-a05 is not listed on IDEAS
    5. Brent Sohngen & Robert Mendelsohn, 2003. "An Optimal Control Model of Forest Carbon Sequestration," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(2), pages 448-457.
    6. repec:aen:journl:2006se_weyant-a06 is not listed on IDEAS
    7. DANIEL J. DUDEK & ALICE LeBLANC, 1990. "Offsetting New Co2 Emissions: A Rational First Greenhouse Policy Step," Contemporary Economic Policy, Western Economic Association International, vol. 8(3), pages 29-42, July.
    8. 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.
    9. van 't Veld, Klaas & Plantinga, Andrew, 2005. "Carbon sequestration or abatement? The effect of rising carbon prices on the optimal portfolio of greenhouse-gas mitigation strategies," Journal of Environmental Economics and Management, Elsevier, vol. 50(1), pages 59-81, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Baker, J.S. & Wade, C.M. & Sohngen, B.L. & Ohrel, S. & Fawcett, A.A., 2019. "Potential complementarity between forest carbon sequestration incentives and biomass energy expansion," Energy Policy, Elsevier, vol. 126(C), pages 391-401.
    2. Gren, Ing-Marie & Zeleke, Abenezer Aklilu, 2016. "Policy design for forest carbon sequestration: A review of the literature," Forest Policy and Economics, Elsevier, vol. 70(C), pages 128-136.
    3. Man, Cosmin D. & Lyons, Kevin C. & Nelson, John D. & Bull, Gary Q., 2015. "Cost to produce Carbon credits by reducing the harvest level in British Columbia, Canada," Forest Policy and Economics, Elsevier, vol. 52(C), pages 9-17.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Tavoni, Massimo & Sohngen, Brent & Bosetti, Valentina, 2007. "Forestry and the carbon market response to stabilize climate," Energy Policy, Elsevier, vol. 35(11), pages 5346-5353, November.
    2. Alejandro Caparrós & David Zilberman, 2010. "Optimal carbon sequestration path when different biological or physical sequestration," Working Papers 1018, Instituto de Políticas y Bienes Públicos (IPP), CSIC.
    3. Caparros, Alejandro & Cerda, Emilio & Ovando, P. & Campos, Pablo, 2007. "Carbon Sequestration with Reforestations and Biodiversity-Scenic Values," Climate Change Modelling and Policy Working Papers 9323, Fondazione Eni Enrico Mattei (FEEM).
    4. Susaeta, Andres & Chang, Sun Joseph & Carter, Douglas R. & Lal, Pankaj, 2014. "Economics of carbon sequestration under fluctuating economic environment, forest management and technological changes: An application to forest stands in the southern United States," Journal of Forest Economics, Elsevier, vol. 20(1), pages 47-64.
    5. Im, Eun Ho & Adams, Darius M. & Latta, Gregory S., 2007. "Potential impacts of carbon taxes on carbon flux in western Oregon private forests," Forest Policy and Economics, Elsevier, vol. 9(8), pages 1006-1017, May.
    6. repec:isu:genstf:201101010800001160 is not listed on IDEAS
    7. Hediger, Werner, "undated". "The non-permanence of optimal soil carbon sequestration," 83rd Annual Conference, March 30 - April 1, 2009, Dublin, Ireland 51057, Agricultural Economics Society.
    8. Sharma, Bijay P. & Khanna, Madhu & Miao, Ruiqing, 2022. "Designing Efficient Payments to Incentivize GHG Mitigation Using Energy Crops," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322361, Agricultural and Applied Economics Association.
    9. Adetoye, Ayoade Matthew & Okojie, Luke O. & Akerele, Dare, 2018. "Forest carbon sequestration supply function for African countries: An econometric modelling approach," Forest Policy and Economics, Elsevier, vol. 90(C), pages 59-66.
    10. van 't Veld, Klaas & Plantinga, Andrew, 2005. "Carbon sequestration or abatement? The effect of rising carbon prices on the optimal portfolio of greenhouse-gas mitigation strategies," Journal of Environmental Economics and Management, Elsevier, vol. 50(1), pages 59-81, July.
    11. Lubowski, Ruben N. & Plantinga, Andrew J. & Stavins, Robert N., 2006. "Land-use change and carbon sinks: Econometric estimation of the carbon sequestration supply function," Journal of Environmental Economics and Management, Elsevier, vol. 51(2), pages 135-152, March.
    12. Edwin Van Der Werf & Sonja Peterson, 2009. "Modeling linkages between climate policy and land use: an overview," Agricultural Economics, International Association of Agricultural Economists, vol. 40(5), pages 507-517, September.
    13. Man, Cosmin D. & Lyons, Kevin C. & Nelson, John D. & Bull, Gary Q., 2015. "Cost to produce Carbon credits by reducing the harvest level in British Columbia, Canada," Forest Policy and Economics, Elsevier, vol. 52(C), pages 9-17.
    14. Monge, Juan J. & Bryant, Henry L. & Gan, Jianbang & Richardson, James W., 2016. "Land use and general equilibrium implications of a forest-based carbon sequestration policy in the United States," Ecological Economics, Elsevier, vol. 127(C), pages 102-120.
    15. Jung, Martina, 2003. "The Role of Forestry Sinks in the CDM - Analysing the Effects of Policy Decisions on the Carbon Market," Discussion Paper Series 26293, Hamburg Institute of International Economics.
    16. Michetti, Melania & Parrado, Ramiro, "undated". "Improving land-use modelling within CGE to assess forest-based mitigation potential and costs," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124887, Agricultural and Applied Economics Association.
    17. Ovchinnikova, Natalia & Lynne, Gary D. & Sautter, John & Kruse, Colby, 2006. "What motivates farmers to sequester carbon: an empirical investigation," 2006 Annual meeting, July 23-26, Long Beach, CA 21288, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    18. Pena-Levano, Luis & Taheripour, Farzad & Tyner, Wally, 2020. "Cost comparison of climate change mitigation options," Conference papers 333134, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    19. van Kooten, G. Cornelis & Eagle, Alison J. & Manley, James G. & Smolak, Tara M., 2004. "How Costly Are Carbon Offsets? A Meta-Analysis Of Carbon Forest Sinks," Working Papers 18166, University of Victoria, Resource Economics and Policy.
    20. van Kooten, G. Cornelis & Sohngen, Brent, 2007. "Economics of Forest Ecosystem Carbon Sinks: A Review," International Review of Environmental and Resource Economics, now publishers, vol. 1(3), pages 237-269, September.
    21. Latta, Gregory & Adams, Darius M. & Alig, Ralph J. & White, Eric, 2011. "Simulated effects of mandatory versus voluntary participation in private forest carbon offset markets in the United States," Journal of Forest Economics, Elsevier, vol. 17(2), pages 127-141, April.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • Q23 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Forestry
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:resene:v:36:y:2014:i:1:p:151-165. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/505569 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.