Faustmann and the Climate
This paper presents an adjusted Faustmann Rule for optimal harvest of a forest in the presence of a social cost of carbon emissions. A contribution of the paper is to do this within theoretical and numerical frameworks that take account of the dynamics and interactions of the forest's multiple carbon pools within an infinite time horizon model. With our less restrictive assumptions we find that a social cost of carbon has a significantly stronger effect on the optimal harvest age than found in earlier studies. Considered is also how increased use of harvest residues for energy purposes and storage of carbon in building materials and furniture should influence the length of the rotation period. The theoretical results are quantified within a numerical framework.
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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, Statistics Norway, Research Department.
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- 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.
- 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.
- Tahvonen, Olli, 1995. "Net national emissions, CO2 taxation and the role of forestry," Resource and Energy Economics, Elsevier, vol. 17(4), pages 307-315, December.
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