The role of forestry in carbon sequestration in general equilibrium models
The role of forestry in the global carbon balance is widely recognized, as described in Chapter 3. A number of models and methods have now been developed to assess the potential role of forestry in climate mitigation policy (e.g. Adams et al., 1999; Stavins, 1999; Sohngen and Mendelsohn, 2003; Richards and Stokes, 2004). These studies suggest that forestry could provide 1.0-2.0 PgC/year in sequestration services or avoided emissions through reductions in deforestation for $150-$200/tC, amounting to potentially one-third of efﬁcient global carbon abatement (Sohngen and Mendelsohn, 2003). Given that these prices are well within the range of expected prices associated with fairly stringent carbon abatement policies (see Weyant et al., 2006), current economic analysis suggests that forestry can compete effectively with other mitigation options. However, most of these studies of forestry’s role in climate change policy have been partial equilibrium analyses that have ignored the broader implications of climate policy on economic activity. As this book suggests, it is useful to develop general equilibrium modelling frameworks that capture the full range of implications of climate policies on carbon markets and consequently forest carbon sequestration activity.