Benefit-cost analysis of forest carbon for landowners: An illustration based on a southern pine plantation
Using a hypothetic southern pine plantation in the state of Georgia of the United States, a benefit-cost analysis of forest carbon is conducted for landowners in the voluntary carbon market. With carbon values being defined by the marginal forest growth, it is found that the inclusion of carbon into...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
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Frontiers Media S.A.
2022-08-01
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| Series: | Frontiers in Forests and Global Change |
| Subjects: | |
| Online Access: | https://www.frontiersin.org/articles/10.3389/ffgc.2022.931504/full |
| _version_ | 1811309214177427456 |
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| author | Bin Mei Michael L. Clutter |
| author_facet | Bin Mei Michael L. Clutter |
| author_sort | Bin Mei |
| collection | DOAJ |
| description | Using a hypothetic southern pine plantation in the state of Georgia of the United States, a benefit-cost analysis of forest carbon is conducted for landowners in the voluntary carbon market. With carbon values being defined by the marginal forest growth, it is found that the inclusion of carbon into the objective function usually leads to longer rotations and higher total profits. In our baseline analysis, the rotation age increases by four years when both timber and carbon are considered. Thus, landowners can benefit from voluntary carbon trading and additional carbon can be fixed in the forests. Landowners’ decision on forest carbon is most sensitive to the discount rate and timber and carbon prices. When the discount rate is higher, future cash flows become less valuable and the optimal rotation shortens. When timber prices exceed carbon price by a large margin, timber value dominates carbon value and the optimal carbon rotation approaches the Faustmann rotation. Therefore, with a higher discount rate and higher timber prices, voluntary carbon trading will result in less carbon additionality. Finally, when the economic uncertainty is incorporated into the decision making, the results tend to be sustained albeit carbon additionality is slightly reduced. |
| first_indexed | 2024-04-13T09:38:21Z |
| format | Article |
| id | doaj.art-e99160dfb6cd4f18876672d607a0e897 |
| institution | Directory Open Access Journal |
| issn | 2624-893X |
| language | English |
| last_indexed | 2024-04-13T09:38:21Z |
| publishDate | 2022-08-01 |
| publisher | Frontiers Media S.A. |
| record_format | Article |
| series | Frontiers in Forests and Global Change |
| spelling | doaj.art-e99160dfb6cd4f18876672d607a0e8972022-12-22T02:52:02ZengFrontiers Media S.A.Frontiers in Forests and Global Change2624-893X2022-08-01510.3389/ffgc.2022.931504931504Benefit-cost analysis of forest carbon for landowners: An illustration based on a southern pine plantationBin Mei0Michael L. Clutter1Warnell School of Forestry and Natural Resources, University of Georgia, Athens, GA, United StatesF&W Forestry, Albany, NY, United StatesUsing a hypothetic southern pine plantation in the state of Georgia of the United States, a benefit-cost analysis of forest carbon is conducted for landowners in the voluntary carbon market. With carbon values being defined by the marginal forest growth, it is found that the inclusion of carbon into the objective function usually leads to longer rotations and higher total profits. In our baseline analysis, the rotation age increases by four years when both timber and carbon are considered. Thus, landowners can benefit from voluntary carbon trading and additional carbon can be fixed in the forests. Landowners’ decision on forest carbon is most sensitive to the discount rate and timber and carbon prices. When the discount rate is higher, future cash flows become less valuable and the optimal rotation shortens. When timber prices exceed carbon price by a large margin, timber value dominates carbon value and the optimal carbon rotation approaches the Faustmann rotation. Therefore, with a higher discount rate and higher timber prices, voluntary carbon trading will result in less carbon additionality. Finally, when the economic uncertainty is incorporated into the decision making, the results tend to be sustained albeit carbon additionality is slightly reduced.https://www.frontiersin.org/articles/10.3389/ffgc.2022.931504/fullclimate changeFaustmann modelprofit maximizationpublic goodsreal options |
| spellingShingle | Bin Mei Michael L. Clutter Benefit-cost analysis of forest carbon for landowners: An illustration based on a southern pine plantation Frontiers in Forests and Global Change climate change Faustmann model profit maximization public goods real options |
| title | Benefit-cost analysis of forest carbon for landowners: An illustration based on a southern pine plantation |
| title_full | Benefit-cost analysis of forest carbon for landowners: An illustration based on a southern pine plantation |
| title_fullStr | Benefit-cost analysis of forest carbon for landowners: An illustration based on a southern pine plantation |
| title_full_unstemmed | Benefit-cost analysis of forest carbon for landowners: An illustration based on a southern pine plantation |
| title_short | Benefit-cost analysis of forest carbon for landowners: An illustration based on a southern pine plantation |
| title_sort | benefit cost analysis of forest carbon for landowners an illustration based on a southern pine plantation |
| topic | climate change Faustmann model profit maximization public goods real options |
| url | https://www.frontiersin.org/articles/10.3389/ffgc.2022.931504/full |
| work_keys_str_mv | AT binmei benefitcostanalysisofforestcarbonforlandownersanillustrationbasedonasouthernpineplantation AT michaellclutter benefitcostanalysisofforestcarbonforlandownersanillustrationbasedonasouthernpineplantation |