1. Global Forest Carbon Sequestration and Integrated Assessment
Brent Sohngen
Roger Sedjo
Robert Mendelsohn
Funding From: DOE, EPA

2. Main Issues Addressed How much is a ton of carbon sequestration worth?
How much carbon can be stored globally?
Big enough to affect the price of sequestration
Optimal control model of sequestration
Range of Forest Options: Land Use; Management Intensity; Rotation Age; Markets
Global in scope
Integrated with energy sector

3. Optimal Control Model of Carbon Abatement Minimize NPV of costs of abatement and damages
Subject to:
Change in atmospheric stock =
Baseline Emissions - energy abatement – decay of carbon
– change in forest stock

4. Integrating Carbon Sequestration and Energy Abatement…
Energy abatement and forest sequestration are optimized over time.
Marginal costs are equated among different activities at different times.
The current price for forest sequestration incorporates rising scarcity value.

5. Valuing Carbon in Timber Model
P(t) is the present value of future benefits of abating 1 ton of carbon emissions today
Each 1 ton deviation from the baseline stock of forest carbon in time t is valued at P(t).
The value of holding new tons of sequestered carbon is rented at:
R(t) = P(t)(r-n)

6. Valuing New Carbon Stock
Forest
Stock
Time

7. This Analysis
Link RICE model (Nordhaus and Boyer, 2000) to a global timber market model.
Both are dynamic optimization models operating at 10 year increments.
Develop a reduced form forestry sequestration function and iterate models until sequestration paths and carbon prices are the same.

8. Land Use, Rotations, Management, Markets
Forestry Model
Land Use, Rotations, Management, Markets
Subject to:

9. Forestry Model Max NPV(CS + PS + Annual Carbon Rent)
Rent either total forest carbon or new forest carbon.
50 Ecosystem and Management Classes:
Temperate forests
Subtropical Plantation
Low-mid latitude temperate and subtropical
Northern Inaccessible
Tropical Inaccessible
Carbon parameters from Sohngen and Sedjo (2000)
Explore alternative carbon rental payments

10. RICE Baseline

11. Forest Model Baseline: Prices and Carbon
Baseline Prices Rise
---
0.5% per year
Carbon Storage Declines:
----
30 Billion Tons Total
Approx. 4% of Initial

12. Average Annual Changes Baseline Estimates – to the year 2100

13. Carbon Rental Values
P(100) = $188
P(100) = $61

14. Carbon Storage in Forests

15. Effect on Carbon Prices?

16. Regional Carbon Storage $20 Scenario
Aff./Deforest. = 69%
Rotations/Reserves = 30%
Markets = <1%

17. Timber Price Effects

18. How Costly Are Carbon Sinks? North America and South America

19. How much carbon is this in North America in 2100?
38 – 140 million tons per year

20. How much carbon is this globally in 2050?

21. Scenario Analysis

22. Global Carbon Possibilities Annual Abatement at Decadal Midpoints

23. NA Carbon Possibilities Annual Abatement at Decadal Midpoints

24. Conclusions
billion metric tons of carbon are possible by the end of the century in the range of carbon prices ($61 - $188 per ton)
Total C is consistent with IPCC
Costs are much higher than IPCC
Reduces Atmospheric Carbon, but…
Low Damage:
Sequestration = 35 BtC
Reduced Atmospheric Carbon = 18 BtC
High Damage:
Sequestration = 92 BtC
Reduced Atmospheric Carbon = 43 BtC

25. Conclusions
Large proportion of carbon sequestration occurs in tropics (70%)
Land use change most important (70%)
Rotation ages and management relatively more important in temperate zones
Markets relatively unimportant until late in the century