Potential impact of albedo incorporation in boreal forest sector climate change policy effectiveness

Forests have an important role to play in climate change mitigation through carbon sequestration and wood supply. However, the lower albedo of mature forests compared to bare land implies that focusing only on GHG accounting may lead to biased estimates of forestry's total climatic impacts. An economic model with a high degree of detail of the Norwegian forestry and forest industries is used to simulate GHG fluxes and albedo impacts for the next decades. Albedo is incorporated in a carbon tax/subsidy scheme in the Norwegian forest sector using a partial, spatial equilibrium model. While a price of EU€100/tCO 2 e that targets GHG fluxes only results in reduced harvests, the same price including albedo leads to harvest levels that are five times higher in the first five years, with 39% of the national productive forest land base being cleared. The results suggest that policies that only consider GHG fluxes and ignore changes in albedo will not lead to an optimal use of the forest sector for climate change mitigation. Policy relevance Bare land reflects a larger share of incoming solar energy than dense forest and thus has higher albedo. Earlier research has suggested that changes in albedo caused by management of boreal forest may be as important as carbon fluxes for the forest's overall global warming impacts. The presented analysis is the first attempt to link albedo to national-scale forest climate policies. A policy with subsidies to forest owners that generate carbon sequestration and taxes levied on carbon emissions leads to a reduced forest harvest. However, including albedo in the policy alongside carbon fluxes yields very different results, causing initial harvest levels to increase substantially. The inclusion of albedo impacts will make harvests more beneficial for climate change mitigation as compared to a carbon-only policy. Hence, it is likely that carbon policies that ignore albedo will not lead to optimal forest management for climate change mitigation.