Faustmann and the Climate
The paper presents an adjusted Faustmann Rule for optimal harvest of a forest when there is a social cost of carbon emissions. The theoretical framework takes account of the dynamics and interactions of forests’ multiple carbon pools and assumes an infinite time horizon. Our paper provides a theoretical foundation for numerical model studies that have found that a social cost of carbon implies longer optimal rotation periods and that if the social cost of carbon exceeds a certain threshold value the forest should not be harvested. At the same time we show that it could be a net social benefit from harvesting even if the commercial profit from harvest is negative. If that is the case, the optimal harvest age is decreasing in the social cost of carbon.
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- Adam J. Daigneault & Mario J. Miranda & Brent Sohngen, 2010. "Optimal Forest Management with Carbon Sequestration Credits and Endogenous Fire Risk," Land Economics, University of Wisconsin Press, vol. 86(1), pages 155-172.
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- Asante, Patrick & Armstrong, Glen W., 2012. "Optimal forest harvest age considering carbon sequestration in multiple carbon pools: A comparative statics analysis," Journal of Forest Economics, Elsevier, vol. 18(2), pages 145-156.
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- Holtsmark, Bjart & Hoel, Michael & Holtsmark, Katinka, 2013.
"Optimal harvest age considering multiple carbon pools – A comment,"
Journal of Forest Economics,
Elsevier, vol. 19(1), pages 87-95.
- Bjart Holtsmark & Michael Hoel & Katinka Holtsmark, 2012. "Optimal harvest age considering multiple carbon pools – a comment," Discussion Papers 704, Research Department of Statistics Norway.
- Searchinger, Timothy & Heimlich, Ralph & Houghton, R. A. & Dong, Fengxia & Elobeid, Amani & Fabiosa, Jacinto F. & Tokgoz, Simla & Hayes, Dermot J. & Yu, Hun-Hsiang, 2008. "Use of U.S. Croplands for Biofuels Increases Greenhouse Gases Through Emissions from Land-Use Change," Staff General Research Papers 12881, Iowa State University, Department of Economics.
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