Estimating the costs of reducing CO2 emission via avoided deforestation with integrated assessment modeling

Estimates for deforestation and forest degradation were shown to account for about 17% of greenhouse gas emissions. The implementation of REDD is suggested to provide substantial emission reductions at low costs. Proper calculation of such a costs requires integrated modeling approach involving biophysical impact calculations and estimation economic effects of these. However, only few global modeling studies concerning this issue exist, and the actual implementation can take many forms. This study uses the approach of assuming that non Annex-I countries protect carbon rich areas from deforestation, and therefore loose the opportunity to use it as agricultural area. The opportunity costs of reducing deforestation within the framework of REDD are assessed with the global economic model LEITAP and the biophysical model IMAGE. A key methodological challenge is the representation of land use and the possibility to convert forestry land into agricultural land as REDD policies might prevent the use of forest for agriculture. We endogenize availability of agricultural land by introducing a flexible land supply curve and proxy the implementation of the REDD policies as a shift in the asymptote of this curve representing maximal agricultural land availability in various regions in the world. In a series of experiments, increasingly more carbon rich areas are protected from deforestation, the associated costs in terms of GDP reduction are calculated with the economic model. The associated reduction in CO2 emissions from land use change are calculated by the IMAGE model. From this series of experiments, abatement cost curves, relating CO2 emission reduction to costs of this reduction, are constructed. The results show that globally a maximum CO2 reduction of around 2.5 Gt could be achieved. However, regional differences are large, ranging from about 0 to 3.2 USD per ton CO2 in Africa, 2 to 9 USD in South and Central America, and 20 to 60 USD in Southeast Asia.