Forest Carbon Economics: What We Know, What We Do Not And Whether It Matters

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They are an important economic resource, and a source of food products, recreation, species habitat, and watershed protection, among many other services. Forests also may store large quantities of carbon. The threat of climate change therefore provides new impetus for forest management, in the form of forest carbon sequestration (FCS). FCS appears to be a relatively cheap way of reducing carbon in the atmosphere, relative to alternatives such as fuel switching. But FCS is not without problems. Economists' estimates of the cost-effectiveness of FCS are highly variable. Verification is difficult. And policy design is complex — not only because of the characteristics of forests themselves, but because of the limitations of current U.S. policy. Existing regulatory tools — predominantly the Clean Air Act — are largely incompatible in providing incentives for FCS. This paper explores the current state of FCS knowledge, including its policy context, and identifies an agenda for future research.


DOI: 10.1142/S2010007812500224