Deferred rotation carbon programs for even-aged forests: Aligning landowner and societal objectives

Forest carbon program opportunities continue to expand for nonindustrial private landowners. We propose a novel forest harvest deferral-based program that would offer a stream of payments (a subsidy) for landowners in exchange for a rotation deferral. We analytically derive a representative landowner's marginal costs and marginal benefits associated with the deferred forest rotation and calculate the minimum payment necessary to incentivize a landowner to choose the socially optimal rotation instead of the private solution. At the socially optimal rotation age, the benefits to society from harvest deferral stem from the additional CO2 sequestered through biomass production and storage of CO2 for the longer periods inherent in sawtimber products. A simulation is used to assess how sensitive the socially optimal rotation age is to different site productivity levels and other assumptions. We show that more productive sites mean shorter forest rotation extension periods and demand higher payments due to the higher land and capital opportunity costs involved with deferred harvests. We also show that a longer sawtimber lifespan increases the socially optimal rotation time. All scenarios explored suggest that rotation extensions should be greater than one and shorter than twenty years. The methodology we propose is the only one that we are aware of that objectively determines the optimal forest harvest deferral time for different scenarios while aligning private landowner and societal objectives.