Optimal Harvest Decision Considering Carbon Stored in Forest and Wood Products, and Associated Fossil Fuel Carbon Emissions

Abstract

In developing incentives and protocols to reduce carbon emissions and increase carbon sequestration, one important omission stands out. Policy makers have ignored or minimized the importance of carbon storage in wood products and the associated secondary emissions. In this paper, I present the results from a discrete dynamic programming model used to determine the optimal harvest decision for a forest stand that provides benefits from timber harvest, carbon sequestered in forest and carbon storage in wood products. This study is distinguishable from previous studies because it considers varying levels of starting dead organic matter (DOM) and wood product stocks. This is important because it allows one to establish a threshold level for determining if a landowner is better off participating in the type of carbon market considered in this study. The results of the study suggest that the optimal decision to harvest is independent on the carbon stocks in the wood product pool but significantly affects economic returns to carbon management. The results also indicate that economic returns decrease with increasing initial levels of carbon in wood product and secondary carbon emissions have very little or no impact on the optimal decision to harvest. Contrary to the results from other studies, the results from this study reveal that increasing carbon price for a landowner to participate in the type of carbon market considered in this study will have the counterintuitive result of inducing the landowner to manage for carbon, if the wood product pool is considered.