The Potential Of Forestry To Mitigate Climate Change Through Global Markets

The first part of this chapter has explored the mechanisms that create markets for GHG reductions. It was demonstrated how caps on allowances to emitters and facilitating their trading gives allowances a price, as well as how trading of allowances by emitters reduces the cost of compliance. It was also demonstrated how offsets (including forestry offsets) substitute for, and are compatible with, allowances and can be incorporated into cap and trade schemes.

The second part of this chapter examines the potential of increasing afforestation and reforestation and reducing deforestation to mitigate climate change. The examination is in the context of payments for CO2e removed from the atmosphere (see Figure 1.3).

Discussion in the literature of 'carbon' in carbon sequestration and in markets is often confused by a failure to identify whether the subject is carbon (C) or carbon dioxide (CO2); Box 1.5 clarifies the relationship between the two.

Up to the present, the global establishment of forests has been driven by the need for wood products or for multiple environmental benefits. It is only recently that forests have been studied for their potential to mitigate climate change through carbon sequestration. The importance of such studies is that they contribute to an understanding of the role of forests in contributing to an integrated approach to climate change mitigation policy, both nationally and globally.

The timing of benefits and costs of planting new forests and the conservation of existing forests is very important in determining the cost of carbon sequestered. The carbon uptake by new forests is typified by being slow initially, followed by a period of accelerated sequestration with a maximum

Source: © Satoshi Kambayashi, 2006.

Figure 1.3 Carbon markets make payments for measured CO2e removals from the atmosphere by forests

Source: © Satoshi Kambayashi, 2006.

Figure 1.3 Carbon markets make payments for measured CO2e removals from the atmosphere by forests between 10 and 20 years, and then a leveling off as the forest matures. In contrast, the impact of prevention of deforestation is immediate. However, in both cases, most of the costs are incurred in year 0: see Figure 1.4.

The fact that benefits from sustainable forest management and the planting of new forests are delayed raises questions about their value today compared with activities that generate more immediate benefits. Chapter 2 explores this issue further in the context of the Kyoto Protocol, and Chapter 3 contains a detailed analysis of the implications for markets of the timing issue in forestry.

While the response times differ between forestry abatement options, all will respond to a price on carbon that makes sequestration more competitive than other land uses.

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