Important Biophysical Aspects of Sinks that Shape Their Inclusion in Trading

Forest and soil sinks depend jointly on natural processes and the actions of humans. A farmer or forester manages the land; that management affects the rate of vegetation growth (carbon uptake) and decomposition (return of carbon to the atmosphere). Carbon storage occurs if for some reason the uptake exceeds decomposition, and for the storage to be meaningful, average uptake must exceed decomposition for some number of years, otherwise one is simply tracking diurnal and seasonal cycles. The joint dependence on actions by humans and on the response of natural systems raises some issues in considering biological carbon management. We will argue later that these differences do not pose major problems for inclusion of sinks in a cap-and-trade system providing reasonable procedures can be established for measuring carbon storage and tracking changes in it. It should be noted that energy systems also have a joint dependence on nature and human management. Energy demand for space conditioning is weather- and climate-dependent, as severe weather can damage or interfere with energy infrastructure, and renewable energy such as hydro, solar, wind and bio-

mass is at least as dependent on nature as is carbon storage in biological systems. A severe drought might disrupt vegetation growth or lead to a forest fire and thus to unplanned carbon emissions. That same drought might lead to low hydro capacity, increase demand for electricity for air conditioning and be associated with a lack of wind to power wind turbines. An electricity generator might then need to rely on existing fossil-generating capacity more than expected, leading to unplanned emissions of CO2. The unique features of the interaction between nature and management are important considerations in the design of a carbon trading system, and how it will work, but they are not a barrier to establishing markets for carbon. If anything, they enhance the case for a market - it is in just these cases of unexpected changes that markets are able to allocate goods to their highest use, and find goods at their least cost.

Given our focus on vegetation and soil sinks, we review here some of the evidence on the interaction of management and nature as it affects carbon. The intent is to illustrate the magnitude and nature of these interactions rather than to assess them comprehensively. Understanding these issues leads to some practical guidance on how to include sinks in a carbon trading system. Among the important features we identify: (i) the effect of management can be extremely site-specific; (ii) carbon storage is highly variable from season to season as it depends on weather even if management is unchanged; and (iii) earth system feedbacks blur the line between nature and human action. Here we rely on previously published results or results from models that have been previously published.

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