Impact of payments for carbon sequestered in wood products and avoided carbon emissions on the profitability of NIPF landowners in the US South

http://www.sciencedirect.com/science/article/pii/S0921800912001280

Abstract: This study determines economic impact of payments for carbon sequestered in wood products and avoided carbon emissions due to use of forest biomass for electricity generation instead of fossil fuels on the profitability of non-industrial private forest (NIPF) landowners in the US South. Penalties for carbon emitted at the time of undertaking various silvicultural activities and exponential decay of wood products were also considered. We used life-cycle assessment to evaluate carbon emissions from various silvicultural activities. We modified the traditional Faustmann forest rotation model to incorporate identified carbon payments and penalties. Slash pine (Pinus elliottii) was selected as a representative species. We found that the overall global warming impact (GWI) for managing a hectare of intensively managed slash pine plantation was 6539 kg carbon dioxide equivalent. The maximum land expectation value (LEV) for the scenario when all carbon payments and penalties along with payments for timber products were considered was $1299/ha using a 20 year rotation age. This value is about 71% higher than the LEV when only payments for timber products were taken into account ($760/ha using a 21 year rotation age). Our results clearly indicate that emerging carbon markets could greatly benefit southern NIPF landowners.

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Highlights

► NIPF landowners in the US South supply majority of timber products at the national level.
► Payments for carbon sequestered in forest biomass, carbon stored in forest products, and avoided carbon emissions are important.
► These carbon payments can increase the profitability of southern NIPF landowners by 71% from base scenario.

by Puneet Dwivedi^{a, ,} , Robert Bailis^a, Andrew Stainback^b and Douglas R. Carter^c 

^aSchool of Forestry & Environmental Studies, Yale University, Room # 125 Kroon Hall, 195 Prospect Street, New Haven, CT (06511), United States. Tel.: + 1 203 436 5362; fax: + 1 203 436 9158

^b Department of Forestry, College of Agriculture, University of Kentucky, Lexington, KY, 40546, United States 

^c School of Forest Resources and Conservation, University of Florida, Gainesville, FL, 32601, United States

Ecological Economics

Volume 78, June 2012, Pages 63–69
Keywords: Avoided carbon emissions; Carbon in wood products; Faustmann model; Life-cycle assessment; Optimal rotation age; Southern United States