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Potential for Carbon Forest Plantations in Marginal Timber Forests: The Case of Patagonia, Argentina

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  • Sedjo, Roger A.

Abstract

With the advent of the Kyoto Protocol and its recognition of the use of forestry activities and carbon sinks as acceptable tools for addressing the issue of the build-up of atmospheric carbon, the potential role of planted forests as a vehicle for carbon sequestration has taken on a new significance. Additionally, the emergence of tradable emission permits and now tradable carbon offsets provides a vehicle for financially capturing the benefits of carbon emission reductions and carbon offsetting activities. In a world where carbon sequestration has monetary value, investments in planted forests can be made with an eye to revenues to (at least two) joint outputs: timber and the carbon sequestration services. The first section of this paper examines the Patagonia region of Argentina, as an example of an area where carbon sequestration values combined with timber values create financial incentives for creating planted forests, which could not be justified on the bases of timber values alone. The paper uses a present value approach to evaluate the costs and benefits of plantation forestry in a "representative" site in Patagonia. A basic timber harvest scenario is developed and then a number of alternative scenarios are examined. These introduce carbon as an additional product to be produced "jointly" with timber. The scenarios include alternative rotation periods, alternative prices for carbon offsets, and a brief examination of the effect of undertaking a specific silvicultural activity. In the second section of the paper the results of this analysis are considered in the context of a discussion of the various types of institutional arrangements that might be required to provide a market for the carbon sequestration services provided by the planted forests. The paper identifies, examines and discusses a number of potential institutional arrangements that exist or are under discussion for marketing carbon sequestration services. A number of problems that may arise with offset credits and some of the innovative institutions that may be created are identified and discussed.

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  • Sedjo, Roger A., 1999. "Potential for Carbon Forest Plantations in Marginal Timber Forests: The Case of Patagonia, Argentina," Discussion Papers 10661, Resources for the Future.
    • Handle: RePEc:ags:rffdps:10661
    DOI: 10.22004/ag.econ.10661
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    References listed on IDEAS

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    1. Roger Sedjo & Joe Wisniewski & Alaric Sample & John Kinsman, 1995. "The economics of managing carbon via forestry: Assessment of existing studies," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 6(2), pages 139-165, September.
    2. G. Cornelis van Kooten & Clark S. Binkley & Gregg Delcourt, 1995. "Effect of Carbon Taxes and Subsidies on Optimal Forest Rotation Age and Supply of Carbon Services," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 77(2), pages 365-374.
    3. Robert N. Stavins, 1999. "The Costs of Carbon Sequestration: A Revealed-Preference Approach," American Economic Review, American Economic Association, vol. 89(4), pages 994-1009, September.
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    1. Sedjo, Roger A., 2001. "Forest Carbon Sequestration: Some Issues for Forest Investments," Discussion Papers 10571, Resources for the Future.
    2. Kenneth M. Chomitz, 2002. "Baseline, leakage and measurement issues: how do forestry and energy projects compare?," Climate Policy, Taylor & Francis Journals, vol. 2(1), pages 35-49, March.
    3. Acosta, Montserrat & Sohngen, Brent, 2009. "How big is leakage from forestry carbon credits? Estimates from a Global Model," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49468, Agricultural and Applied Economics Association.
    4. Olschewski, Roland & Benitez, Pablo C., 2005. "Secondary forests as temporary carbon sinks? The economic impact of accounting methods on reforestation projects in the tropics," Ecological Economics, Elsevier, vol. 55(3), pages 380-394, November.
    5. Jung, Martina, 2003. "The Role of Forestry Sinks in the CDM - Analysing the Effects of Policy Decisions on the Carbon Market," Discussion Paper Series 26293, Hamburg Institute of International Economics.
    6. Tassone, Valentina C. & Wesseler, Justus & Nesci, Francesco S., 2004. "Diverging incentives for afforestation from carbon sequestration: an economic analysis of the EU afforestation program in the south of Italy," Forest Policy and Economics, Elsevier, vol. 6(6), pages 567-578, October.
    7. Galinato, Gregmar I. & Olanie, Aaron & Uchida, Shinsuke & Yoder, Jonathan K., 2011. "Long-term versus temporary certified emission reductions in forest carbon sequestration programs," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 55(4), pages 1-23.
    8. Caplan, Arthur J., 2011. "Carbon sequestration and permit trading on the competitive fringe," Economic Modelling, Elsevier, vol. 28(6), pages 2803-2810.
    9. Benitez, Pablo C. & McCallum, Ian & Obersteiner, Michael & Yamagata, Yoshiki, 2007. "Global potential for carbon sequestration: Geographical distribution, country risk and policy implications," Ecological Economics, Elsevier, vol. 60(3), pages 572-583, January.
    10. Jung, Martina, 2003. "The Role of Forestry Sinks in the CDM - Analysing the Effects of Policy Decisions on the Carbon Market," HWWA Discussion Papers 241, Hamburg Institute of International Economics (HWWA).
    11. Sedjo, Roger, 2001. "Forest Carbon Sequestration: Some Issues for Forest Investments," RFF Working Paper Series dp-01-34, Resources for the Future.
    12. Olschewski, Roland & Benítez, Pablo C. & de Koning, G.H.J. & Schlichter, Tomás, 2005. "How attractive are forest carbon sinks? Economic insights into supply and demand of Certified Emission Reductions," Journal of Forest Economics, Elsevier, vol. 11(2), pages 77-94, September.

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