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A Methodological Investigation of the Costs of Carbon Sequestration

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  • Robert N. Stavins

Abstract

Increased attention by policy makers to the threat of global climate change has brought with it considerable attention to the possibility of encouraging the growth of forests as a means of sequestering carbon dioxide. This approach has, in fact, become an explicit element of both U.S. and international climate policies. This paper develops a methodology whereby estimates of the costs of carbon sequestration can be developed on the basis of evidence from observations of landowners' behavior when confronted with the opportunity costs of alternative land uses. The analytical model takes account of silvicultural understanding of the intertemporal linkages between deforestation and carbon emissions, on the one hand and between forestation and carbon sequestration, on the other. The results support the efficacy and potential value of this analytical approach. The paper is intended to be illustrative of how econometric analyses of land use, which already exist for a number of countries, can be used to develop better region-specific estimates of the marginal costs of carbon sequestration.
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  • Robert N. Stavins, 1998. "A Methodological Investigation of the Costs of Carbon Sequestration," Journal of Applied Economics, Taylor & Francis Journals, vol. 1(2), pages 231-277, November.
    • Handle: RePEc:taf:recsxx:v:1:y:1998:i:2:p:231-277
    DOI: 10.1080/15140326.1998.12040524
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    1. Pindyck, Robert S, 1991. "Irreversibility, Uncertainty, and Investment," Journal of Economic Literature, American Economic Association, vol. 29(3), pages 1110-1148, September.
    2. Parks Peter J., 1995. "Explaining Irrational Land Use: Risk Aversion and Marginal Agricultural Land," Journal of Environmental Economics and Management, Elsevier, vol. 28(1), pages 34-47, 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. 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.
    7. 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.
    8. Parks P. J. & Kramer R. A., 1995. "A Policy Simulation of the Wetlands Reserve Program," Journal of Environmental Economics and Management, Elsevier, vol. 28(2), pages 223-240, March.
    9. G. Cornelis van Kooten & Clark S. Binkley & Gregg Delcourt, 1995. "Effect of Carbon Taxes and Subsidies on Optimal Forest Rotation Age and Supply of Carbon Services," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 77(2), pages 365-374.
    10. 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.
    11. 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.
    12. 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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    Cited by:

    1. Sedjo, Roger A., 2001. "Forest Carbon Sequestration: Some Issues for Forest Investments," Discussion Papers 10571, Resources for the Future.
    2. Mooney, Sian & Antle, John M. & Capalbo, Susan Marie & Paustian, Keith H., 2002. "Contracting For Soil Carbon Credits: Design And Costs Of Measurement And Monitoring," 2002 Annual meeting, July 28-31, Long Beach, CA 19616, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

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