The Opportunity Costs of Afforestationreforestation

In land-rich countries such as Canada, Australia and the US, existing forests are generally under government control. Increases in afforestation and reforestation therefore need to take place on private land. But the question needs to be asked whether landowners would be willing to afforest or reforest in order to gain carbon credits. A study in western Canada by van Kooten et al. (2002) found that 23 per cent of farmers were not interested in planting trees under any circumstances. Conclusions were that tree planting on agricultural land cannot be justified solely on the basis of carbon uptake benefits. Non-market benefits of scenic diversity, increased wildlife habitat and water and soil conservation have a bearing on uptake (van Kooten and Eagle, 2005).

The costs of forestry options for landowners in Australia are summarized in Box 1.6.

The need for caution about estimating afforestation/reforestation responses to payments for carbon also extends to developing countries as illustrated by a single example. In a Panamanian study, low-income landowners were advised of the benefits of afforestation under CDM projects (Coomes et al., 2008). Landowners favored cattle over afforestation even though cattle were less profitable. Compared to cattle, the forestry asset was regarded as very illiquid. Other negative economic and risk factors of forestry included high establishment costs, high labor demands and production and price risks. The authors concluded that present prices for sequestered carbon under the CDM provide an insufficient incentive to establish plantations or to halt continued forest conversion for cattle raising.

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