Skip to main content Accessibility help
×
×
Home

Market-Level Implications of Regulating Forest Carbon Storage and Albedo for Climate Change Mitigation

  • Aapo Rautiainen, Jussi Lintunen and Jussi Uusivuori
Abstract

We explore the optimal regulation of forest carbon and albedo for climate change mitigation. We develop a partial equilibrium market-level model with socially optimal carbon and albedo pricing and characterize optimal land allocation and harvests. We numerically assess the policy's market-level impacts on land allocation, harvests, and climate forcing, and evaluate how parameter choices (albedo strength, productivity of forest land, and carbon and albedo prices) affect the outcomes. Carbon pricing alone leads to an overprovision of climate benefits at the expense of food and timber production. Complementing the policy with albedo pricing reduces these welfare losses.

  • View HTML
    • Send article to Kindle

      To send this article to your Kindle, first ensure no-reply@cambridge.org is added to your Approved Personal Document E-mail List under your Personal Document Settings on the Manage Your Content and Devices page of your Amazon account. Then enter the ‘name’ part of your Kindle email address below. Find out more about sending to your Kindle. Find out more about sending to your Kindle.

      Note you can select to send to either the @free.kindle.com or @kindle.com variations. ‘@free.kindle.com’ emails are free but can only be sent to your device when it is connected to wi-fi. ‘@kindle.com’ emails can be delivered even when you are not connected to wi-fi, but note that service fees apply.

      Find out more about the Kindle Personal Document Service.

      Market-Level Implications of Regulating Forest Carbon Storage and Albedo for Climate Change Mitigation
      Available formats
      ×
      Send article to Dropbox

      To send this article to your Dropbox account, please select one or more formats and confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your <service> account. Find out more about sending content to Dropbox.

      Market-Level Implications of Regulating Forest Carbon Storage and Albedo for Climate Change Mitigation
      Available formats
      ×
      Send article to Google Drive

      To send this article to your Google Drive account, please select one or more formats and confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your <service> account. Find out more about sending content to Google Drive.

      Market-Level Implications of Regulating Forest Carbon Storage and Albedo for Climate Change Mitigation
      Available formats
      ×
Copyright
This is an Open Access article, distributed under the terms of the Creative Commons Attribution-NonCommercial-NoDerivatives licence (http://creativecommons.org/licenses/by-nc-nd/4.0/), which permits non-commercial re-use, distribution, and reproduction in any medium, provided the original work is unaltered and is properly cited. The written permission of Cambridge University Press must be obtained for commercial re-use or in order to create a derivative work.
Corresponding author
Correspondence: Aapo Rautiainen Latokartanonkaari 900790 HelsinkiFinland ■ Email: aapo.rautiainen@luke.fi
Footnotes
Hide All

The research was conducted as a part of the OPTICA project funded by the Academy of Finland (Grant no. 295870). The views expressed are the authors’ and do not necessarily represent the policies or views of any sponsoring agencies.

Footnotes
References
Hide All
Anderson, K., and Peters, G.. 2016. “The Trouble with Negative Emissions.” Science 354(6309): 182183.
Betts, R.A. 2000. “Offset of the Potential Carbon Sink from Boreal Forestation by Decreases in Surface Albedo.” Nature 408(6809): 187.
Bright, R.M., Strømman, A.H., and Peters, G.P.. 2011. “Radiative Forcing Impacts of Boreal Forest Biofuels: A Scenario Study for Norway in Light of Albedo.” Environmental Science & Technology 45(17): 75707580.
Cunha-e-Sá, M.A., Rosa, R., and Costa-Duarte, C.. 2013. “Natural Carbon Capture and Storage (NCCS): Forests, Land Use and Carbon Accounting.” Resource and Energy Economics 35(2): 148170.
Faustmann, M. 1849. “Berechnung des Wertes Welchen Waldboden Sowie Noch Nicht Haubare Holzbestände für die Waldwirtschaft Besitzen.” Allgemeine Forst-und Jagd-Zeitung 15: 744.
Fuss, S., Canadell, J.G., Peters, G.P., Tavoni, M., Andrew, R.M., Ciais, P., and Le Quéré, C. 2014. “Betting on Negative Emissions.” Nature Climate Change, 4(10): 850853.
Hanewinkel, M., Cullmann, D.A., Schelhaas, M.J., Nabuurs, G.J., and Zimmermann, N.E.. 2013. “Climate Change may Cause Severe Loss in the Economic Value of European Forest Land.” Nature Climate Change 3(3): 203207.
Hartman, R. 1976. “The Harvesting Decision When A Standing Forest Has Value.” Economic Inquiry 14(1): 5258.
Lintunen, J., Laturi, J., and Uusivuori, J.. 2015. Finnish Forest and Energy Policy Model (FinFEP): A Model Description. Natural Resources and Bioeconomy Studies 59.
Lintunen, J., Laturi, J., and Uusivuori, J.. 2016. “How Should A Forest Carbon Rent Policy be Implemented?Forest Policy and Economics 69: 3139.
Lintunen, J., and Uusivuori, J.. 2016. “On the Economics of Forests and Climate Change: Deriving Optimal Policies.” Journal of Forest Economics 24: 130156.
Lukeš, P., Stenberg, P., and Rautiainen, M.. 2013. “Relationship between Forest Density and Albedo in the Boreal Zone.” Ecological Modelling 261: 7479.
Lutz, D.A., and Howarth, R.B.. 2014. “Valuing Albedo as an Ecosystem Service: Implications for Forest Management.” Climatic Change 124(1-2): 5363.
Lutz, D.A., and Howarth, R.B.. 2015. “The Price of Snow: Albedo Valuation and a Case Study for Forest Management.” Environmental Research Letters 10(6): 064013.
Lutz, D.A., et al. 2016. “Trade-Offs Between Three Forest Ecosystem Services Across the State of New Hampshire, USA: Timber, Carbon, and Albedo.” Ecological Applications 26(1): 146161.
Matthies, B.D., and Valsta, L.T.. 2016. “Optimal Forest Species Mixture with Carbon Storage and Albedo Effect for Climate Change Mitigation.” Ecological Economics 123: 95105.
Myhre, G., Shindell, D., Bréon, F.-M., Collins, W., Fuglestvedt, J., Huang, J., Koch, D., Lamarque, J.-F., Lee, D., Mendoza, B., Nakajima, T., Robock, A., Stephens, G., Takemura, T., and Zhang, H.. 2013. Anthropogenic and Natural Radiative Forcing. In Stocker, T.F., Qin, D., Plattner, G.-K., Tignor, M., Allen, S.K., Boschung, J., Nauels, A., Xia, Y., Bex, V. and Midgley, P.M., Eds., Climate Change 2013: The Physical Science Basis. Contribution of Working Group I to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change. Cambridge, UK and New York: Cambridge University Press.
NASA 2016. “Langley Fu & Liou On-Line Radiative Transfer Model”. Available at: https://www-cave.larc.nasa.gov/cgi-bin/fuliou/runfl.cgi
Nordhaus, W. 2014. “Estimates of the Social Cost of Carbon: Concepts and Results From the DICE-2013R Model and Alternative Approaches.” Journal of the Association of Environmental and Resource Economists 1(1/2): 273312.
Nordhaus, W.D. 2006. “The “Stern review” on the economics of climate change.” National Bureau of Economic Research Working Paper 12741.
Nordhaus, W.D., and Sztorc, P.. (2013) DICE 2013R: Introduction and User's Manual, 31 October 2013.
Peters, G.P., Andrew, R.M., Boden, T., Canadell, J.G., Ciais, P., Quéré, C. Le, and Wilson, C.. 2012. “The Challenge to Keep Global Warming Below 2 C.” Nature Climate Change, 3(1): 4.
Piazza, A., and Roy, S. (2015). “Deforestation and Optimal Management.” Journal of Economic Dynamics and Control, 53, 1527.
Pigou, A.C. 1920. The Economics of Welfare. McMillan&Co., London (1932).
Pohjola, J., Laturi, J., Lintunen, J., and Uusivuori, J. (2018). “Immediate and Long-Run Impacts of a Forest Carbon Policy: A Market-Level Assessment with Heterogeneous Forest Owners.Journal of Forest Economics, 32: 94105.
Rautiainen, A., and Lintunen, J.. 2017. “Social Cost of Forcing: A Basis for Pricing all Forcing Agents.” Ecological Economics 133: 4251.
Rautiainen, A., Lintunen, J., and Uusivuori, J.. 2017. “Carbon Taxation of the Land Use Sector—the Economics of Soil Carbon.” Natural Resource Modeling 30(2): 129. Available at https://onlinelibrary.wiley.com/doi/full/10.1111/nrm.12126 (Accessed May 8, 2018).
Salo, S., and Tahvonen, O.. 2004. “Renewable Resources with Endogenous Age Classes and Allocation of Land.” American Journal of Agricultural Economics 86(2): 513530.
Samuelson, P.A. 1976. “Economics of forestry in an evolving society.” Economic inquiry 14(4), 466492.
Sjølie, H.K., Latta, G.S., and Solberg, B.. 2013a. “Potential Impact of Albedo Incorporation in Boreal Forest Sector Climate Change Policy Effectiveness.” Climate Policy 13(6): 665679.
Sjølie, H.K., Latta, G.S., and Solberg, B.. 2013b. “Potentials and Costs of Climate Change Mitigation in the Norwegian Forest Sector: Does Choice of Policy Matter?Canadian Journal of Forest Research 43(6): 589598.
Smith, P., Bustamante, M., Ahammad, H., Clark, H., Dong, H., Elsiddig, E.A., Haberl, H., Harper, R., House, J., Jafari, M., Masera, O., Mbow, C., Ravindranath, N.H., Rice, C.W., Robledo Abad, C., Romanovskaya, A., Sperling, F., and Tubiello, F.. 2014. Agriculture, Forestry and Other Land Use (AFOLU). In Edenhofer, O., Pichs-Madruga, R., Sokona, Y., Farahani, E., Kadner, S., Seyboth, K., Adler, A., Baum, I., Brunner, S., Eickemeier, P., Kriemann, B., Savolainen, J., Schlömer, S., von Stechow, C., Zwickel, T. and Minx, J.C., eds., Climate Change 2014: Mitigation of Climate Change. Contribution of Working Group III to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change. Cambridge, UK and New York, NY: Cambridge University Press.
Smith, P., Davis, S.J., Creutzig, F., Fuss, S., Minx, J., Gabrielle, B., and Van Vuuren, D.P.. 2016. “Biophysical and Economic Limits to Negative CO2 Emissions.” Nature Climate Change 6(1): 4250.
Sohngen, B., and Mendelsohn, R.. 2003. “An Optimal Control Model of Forest Carbon Sequestration.” American Journal of Agricultural Economics 85(2): 448457.
Sohngen, B., Mendelsohn, R., and Sedjo, R.. 2001. “A Global Model of Climate Change Impacts on Timber Markets.” Journal of Agricultural and Resource Economics 26(2): 326343.
Stern, N. 2006. Stern Review: The Economics of Climate Change. HM Treasury, London. http://webarchive.nationalarchives.gov.uk/20100407172811/http://www.hm-treasury.gov.uk/stern_review_report.htm
Tahvonen, O., and Rautiainen, A.. 2017. “Economics of Forest Carbon Storage and the Additionality Principle.” Resource and Energy Economics 50: 124134.
Thompson, M.P., Adams, D., and Sessions, J.. 2009. “Radiative Forcing and the Optimal Rotation Age.” Ecological Economics 68(10): 27132720.
Tol, R.S.J. 2012. “On the Uncertainty About the Total Economic Impact of Climate Change.” Environmental and Resource Economics 53(1): 97116.
United States Government (2010). Technical Support Document: Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866. Interagency Working Group on Social Cost of Carbon, United States Government, Washington, DC.
United States Government (2015). Technical Update of the Social Cost of Carbon for Regulatory Impact Analysis—Under Executive Order 12866. Technical Support Document (May 2013, Revised July 2015). Interagency Working Group on Social Cost of Carbon, United States Government, Washington, DC.
Uusivuori, J., and Laturi, J.. 2007. “Carbon Rentals and Silvicultural Subsidies for Private Forests as Climate Policy Instruments.” Canadian Journal of Forest Research 37(12): 25412551.
van Kooten, G.C., Binkley, C.S., and Delcourt, G.. 1995. “Effect of Carbon Taxes and Subsidies on Optimal Forest Rotation age and Supply of Carbon Services.” American Journal of Agricultural Economics 77(2): 365374.
Recommend this journal

Email your librarian or administrator to recommend adding this journal to your organisation's collection.

Agricultural and Resource Economics Review
  • ISSN: 1068-2805
  • EISSN: 2372-2614
  • URL: /core/journals/agricultural-and-resource-economics-review
Please enter your name
Please enter a valid email address
Who would you like to send this to? *
×

Keywords

Type Description Title
PDF
Supplementary materials

Rautiainen et al. supplementary material
Rautiainen et al. supplementary material 1

 PDF (431 KB)
431 KB

Metrics

Altmetric attention score

Full text views

Total number of HTML views: 0
Total number of PDF views: 0 *
Loading metrics...

Abstract views

Total abstract views: 0 *
Loading metrics...

* Views captured on Cambridge Core between <date>. This data will be updated every 24 hours.

Usage data cannot currently be displayed