Forests, Economics and
Global Climate Change
This webpage provides links to research articles, data, and other information on the economics of timber markets, global climate change, and carbon sequestration in forests.
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Forests, Economics and Global Climate Change This webpage provides links to research articles, data, and other information on the economics of timber markets, global climate change, and carbon sequestration in forests. |
If you have any questions or require an article not available through links on this page, please contact
Brent Sohngen
Dept. of Agricultural, Environmental, and Development Economics
The Ohio State University
2120 Fyffe Rd.
Columbus, Ohio 43210-1067
Phone: 614-688-4640
Email: Sohngen.1@osu.edu
Newer Articles:
The forest sector, climate change, and the global carbon cycle - Environmental and Economic Implications by Brent Sohngen, Ralph Alig, and Birger Solberg
July (2007)
This paper assesses recent research on climate change, the forest sector, and the global carbon cycle in order to provide a synthesis of recent research results that investigate how climate change may affect the global forest sector. There is evidence that climate change is already affecting forests, but it is likely to have small market impacts in the near term (to 2020). These impacts could grow in the medium term (2020-2060) if climate mitigation is not undertaken. Estimates suggest that 1/7th to 2/3rds of the world’s temperate and boreal forests could undergo some type of change in the middle part of the century. The long run impacts (beyond 2060) are difficult to project because they depend on multiple uncertain factors, such as demand growth in forestry and agriculture (e.g., land use), the role that climate change mitigation plays (e.g., by potentially expanding forest area), technological development, and regional climate change impacts on ecosystems. Despite the uncertainty, most economic models suggest that market adaptation can limit the most damaging effects in timber markets. Understanding these important interactions between forests, climate change, and carbon flux remains an important research topic, not only for economists and ecologists separately, but more importantly for the sciences to work together.
Forestry and the carbon market response to stabilize climate by Massimo Tavoni, Brent Sohngen, Valentina Bosetti
"Avoided Deforestation as a Greenhouse Gas Mitigation Tool: Economic Issues for Consideration." By B. Sohngen and R. Beach
September (2006)
Tropical deforestation is a significant contributor to accumulation of greenhouse gases (GHGs) in the atmosphere. Previous estimates of GHG emissions from tropical deforestation have been in the range of 1 to 2 petagrams of carbon (Pg C) per year for the 1990s, equivalent to 15% to 30% of global annual GHG emissions from fossil fuels. Currently, forestry activities under the Clean Development Mechanism (CDM) of the Kyoto Protocol are limited to afforestation and reforestation on areas that were not forested in 1990, excluding actions to avoid deforestation. However, interest in creating carbon credits for avoided deforestation was renewed after the 11th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP11) decision in late 2005 to explore approaches to reduce emissions from deforestation. This paper examines the extent of baseline deforestation and associated carbon emissions and the economic potential for incorporating reductions in deforestation as an option for mitigating climate change. Using the Global Timber Model, which is a market model that accounts for above- and below-ground vegetative carbon stock, we find that there is a large potential for avoided deforestation to help reduce GHG mitigation costs. Mitigation ranges from an average of about 0.1 Pg C per year at $5/metric ton of carbon (t C) up to 1.6 Pg C per year at $100/t C.
"The Cost and Quantity of Carbon Sequestration by Extending the Forest Rotation Age." By B. Sohngen and S. Brown.
June (2006)
Increasing forest management and extending the timber rotation age beyond the economically optimal age have been proposed as options for increasing carbon sequestration. In this paper we examine the potential costs and quantity of sequestered carbon from such activities for forests in the southern and western regions of the U.S. A model of optimal rotations when carbon is a valued asset is presented to show how optimal rotations will adjust when carbon is priced. Data on a range of softwood forest types and site classes in 12 southern and western states that dominate softwood timber production in the U.S. are then used to examine the costs of extending rotations. The results indicate that carbon sequestration is relatively expensive from extending rotations. In these 12 states, about 4.1 million t C could be sequestered for less than $25 per t C (1 t C = 1000 Kg Carbon), although for high carbon prices of $200 per t C., up to 57 million t C could be sequestered. Timber prices are found to have important influences on the marginal costs of carbon sequestration, with site quality being of secondary importance. The results also show the carbon prices that would be necessary to set-aside timberland. Very little land would likely be set aside at $50 per ton C, however, at $200 per t C, the results indicate that nearly 1 million hectares of land could be set-aside in the U.S., with 83% of this land occurring in the Western U.S.
Articles are listed in the following categories
NOTE: Most articles can be obtained by emailing your
request to Brent Sohngen.
Some articles can be downloaded in PDF format (where available, they are noted as such).
Global Forests and Carbon Sequestration
Global Forestry Modeling
Timber Market Impacts of Climate
Change
Global Timber Market and
Forestry Data Project (leads to a different page)
Several articles describing potential climate change impacts in the agricultural and forestry sectors, and the potential for mitigation in these sectors.
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Forests & Global Climate Change: Potential Impacts on U.S. Forest Resources |
Report prepared for the Pew Center on Global Climate Change. February, 2003.
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US National Assessment of the Potential Consequences of Climate Variability and Change Sector: Forests |
Report prepared for the US National Assessment of Potential Climate Change Impacts. 2002.
This is a general policy piece that considers the relationship between forests and global climate change. It is intended for a noneconomic audience.
Global Forests and Carbon Sequestration
A Sensitivity Analysis of Carbon Sequestration.
- Brent Sohngen and Robert Mendelsohn, 2005.
- This paper presents the first set of results from the newly updated 2004 version of the Global Timber Model.
- This paper projects how land supply, timber demand, and technical change in the forest sector affect both projections of the amount of carbon that forests will sequester on their own and the effectiveness of efficient carbon sequestration programs. The model projects that although deforestation will slow over time, forests will lose 76 Pg C globally over the next hundred years through timber harvests and land conversion. If the demand for land from agriculture is higher, forests could lose another 7.1 Pg C, if timber demand growth is higher, they could lose another 7.8 Pg C and, if harvest costs decline, they could lose another 10.6 Pg C. Technical change centered on plantations is not expected to have any major impact on carbon sequestration. The model also predicts that carbon sequestration programs could sequester between 55 and 116 Pg C if carbon prices rise by $61 and $188 per ton respectively by the end of the century. Higher agricultural demand for land would reduce these amounts somewhat but sequestration program results are largely insensitive to both demand and technical change in the forestry sector.
Carbon Sequestration in Global Forests Under Different Carbon Price Regimes.
- Brent Sohngen and Roger Sedjo, 2006.
- Energy Journal, 27:109-126 (Please visit journal site for latest version)
- This paper takes a closer look at forest sequestration under different assumptions about the price path for energy and other gas abatement. While it would be useful to integrate directly with energy models, we do not undertake that step in this paper. Rather, we use a set of price paths that are consistent with potential prices from large-scale energy models as part of the Energy Modeling Forum, EMF-21 study. Forest sequestration is then analyzed with the dynamic global forestry model described in Sohngen et al. (1999). The scenarios are carefully analyzed to provide information on (1) where carbon sequestration occurs in the world regionally; (2) how much is derived from different actions in forestry (reducing deforestation, increasing afforestation, enhancing management, or changing rotation ages); and (3) what are the implications of alternative carbon price paths? In addition, the model develops an alternative baseline that is consistent with the SRES scenarios and presents the results of that alternative baseline.
"Stocks and Flows: Carbon inventory and mitigation potential of the Russian forest and land base" by B. Sohngen, K. Andrasko, M. Gytarsky, G. Korovin, L. Laestadius, B. Murray, A. Utkin, and D. Zamolodchikov.
Report from the World Resource Institute. December (2005)
This report examines a number of issues related to forestry and forest carbon sequestration in the Russian Federation. It summarizes and synthesizes data and analytical results presented in a broader technical report developed by a team of Russian scientists (Zamolodchikov et al., 2005). The report is written for the international climate policy community, members of the Russian Federation government responsible for national reporting of forest carbon sinks, and members of the scientific community seeking a synthesized version of the longer technical report.
2005
This short piece provides estimates of the marginal costs of forest carbon sequestration in all regions of the world. The regions are highly aggregated to the level of countries and in many cases continents. They are the first globally comprehensive estimates of the marginal costs of carbon sequestration through forestry actions over a 100 year period for the world. This paper very briefly provides information on the methods used to estimate the marginal costs, and it provides the data in appendices.
B. Sohngen and S. Brown (2005)
Ecological Economics. 57: 698-708.
This paper estimates a forestland management model for the three states in the South Central United States (Arkanses, Louisiana, and Mississippi). Forest type and land-use shares are estimated to be a function of economic and physical variables. The results suggest that while historically pine plantations in this region have been established largely on old agricultural land, in the future pine plantations are likely to occur on converted hardwood-forest lands. This shift in the supply of land for plantations could have large effects on above-ground carbon storage and other ecosystem services. Subsidies of approximately $12 - $27 per hectare per year would maintain the area of hardwood forests and reduce carbon emissions from the above-ground and product pool carbon stocks over the next 30 years. Across the several scenarios considered, results suggest that maintaining hardwoods could be an efficient carbon sequestration alternative. If carbon credits allow for energy emissions offsets, however, there could be additional conversions of land to softwood pine plantations.
Measuring Leakage from Carbon Projects in Open Economies: A Stop Timber Harvesting Project as a Case Study.
- Brent Sohngen and Sandra. Brown. 2004.
- Canadian Journal of Forest Research, 34: 829-839.
- This paper develops methods for estimating leakage from forest based carbon projects that seek to reduce carbon emissions from harvesting timber in tropical forests. A theoretical framework is presented in which a specific country, in this case Bolivia, is treated as supplier to the global timber market. Leakage is measured as the difference in net national carbon emissions from timber harvesting, over a 30 - 50 year time period between the baseline case and a scenario in which some of the land is removed from the concession base. Estimates of timber leakage are made for several different assumptions about future global sequestration policies, capital constraints, demand elasticity, and dead wood decomposition rates. The results suggest that leakage could range from 5% to 42% without discounting carbon, and from 2% to 38% when carbon is discounted. Demand elasticity and wood decomposition rates have the largest effects on the leakage calculation. Leakage is lowest when demand is more elastic and wood decomposition rates are faster, and vice-versa when these conditions are reversed. Leakage appears only to be sensitive to capital constraints when project benefits are measured over a shorter time period.
Optimal Forest Carbon Sequestration
- Brent Sohngen and Robert Mendelsohn.
- This study examines the optimal timing and amount of carbon sequestration as a component of an optimal control model of greenhouse gases. As carbon accumulates in the atmosphere, the carbon rental price should rise suggesting an increasing incentive to sequester carbon over time. A general equilibrium model of sequestration, taking into account global timber prices and the increasing scarcity of land, suggests that substantial amounts of carbon could be sequestered in forests, thus reducing the price of carbon. The bulk of this carbon should be kept in tropical forests with a large proportion of the carbon resulting from reduced deforestation initially. Carbon sequestration is more costly than many estimates in the literature, suggesting that it plays only a partial role in controlling greenhouse gases, and that it is important only if the price of carbon is relatively high.
- Readers should also consider reviewing the article by Sohngen and Mendelsohn in the American Journal of Agricultural Economics, Volume 82, Number 2, pp 448 - 457.
- Brent Sohngen and Richard Haynes (1997)
- Climatic Change, 35(2): 179-197.
- In this paper, we link the impact of fire damage on forests with an economic model of the United States forest sector in order to determine if a reduction in forest fire frequency will increase the projected storage of carbon in United States forests. We first develop a model of forest mortality following fire. We then link this model to an inventory model of United States forests, which allows us to determine how changes in the frequency of fires will impact forest inventories. Changes in inventory levels can be used to project both the amount of carbon stored and an economic response. If fire frequency is reduced from its current level, measured as the average from 1984 to 1990, we find that carbon storage can be increased in unreserved U.S. timberlands over the period 1990 to 2040.
Potential Carbon Flux from Timber Harvests and Management in the Context of a Global Timber Market. (PDF)
- Brent Sohngen and Roger Sedjo (2000)
- Climatic Change. 44: 151-172.
- This paper presents carbon flux estimates arising from the effect of increasing demand on harvests and management of industrial forests in a global timber market. Results are presented for specific regions and the globe. Harvests and management of forests is predicted to store an additional 184 Tg (1 Tg = 1012 grams) of carbon per year in forests and wood products over the next 50 years, with a range of 108 to 251 Tg per year. Although harvests in natural boreal and tropical forest regions will cause carbon releases, new plantation establishment in subtropical emerging regions more than offsets these losses. Unlike many existing studies, these results suggest that harvests and management of North American forests will lead to carbon emissions from that region over the next 50 years. The results are quantitatively sensitive to the assumed growth in demand although the results are qualitatively similar in the sensitivity analysis.
The Effectiveness of Forest Carbon Sequestration Strategies with System-Wide Adjustments (PDF)
- Brent Sohngen, Robert Mendelsohn, and Roger Sedjo (1998)
- This paper addresses the effectiveness of tree planting and forest conservation strategies to increase the sink of carbon in global forests. Because forests are expected to sequester additional carbon without explicit human intervention, a baseline case is presented. The baseline predicts that forests will sequester an additional 17.9 Pg (1015 grams) of carbon over the next 150 years, with nearly 95% of this accruing to storage in marketed forest products. The paper then compares strategies which assume markets adjust to changes in future timber supply to an optimistic regional planner case in which no market adjustment occurs. The resulting predictions show that system wide market interactions may lead to substantial leakage of carbon from the forest system.
Country Specific Global Forest Data Set V.1. (PDF)
- Brent Sohngen and Colleen Tennity
- This paper describes a dataset containing inventory and economic information on global forests. Inventory information on the area of timber in productive forest types is furnished for different age classes, where that information is available. Inventory information for species without verifiable age class data is provided as well. Economic data on timber types is provided, including merchantable timber production functions, prices, rental values, and other information. The data was developed for the Global Trade and Analysis Project at Purdue University, with funding from the US Environmental Protection Agency. The paper describes the methods used to collect the data and provides individuals with information to help them use the data in modeling efforts.
- To review the forestry data described in this article, please visit: Global Timber Market and Forestry Data Project.
Forest Management, Conservation, and Global Timber Markets
- Brent Sohngen, Robert Mendelsohn, and Roger Sedjo
- American Journal of Agricultural Economics, 1999, 81: 1 - 13
- This paper develops a global timber market model which captures how timber supply reacts to future predicted increases in the demand for timber. Higher future demand is expected to increase prices, increase investments in regeneration, increase establishment of plantations, and expand output. Dynamic market responses imply a greater reliance on plantations in productive regions, allowing large areas of natural forest in low valued regions to remain largely intact. Sensitivity analysis suggests that price, harvest, and management are most sensitive to the rate of demand increase, the interest rate, the cost of plantations, and access costs of natural forests.
- An early version of this research can be found in: Sohngen, B., R. Mendelsohn, R. Sedjo, and K. Lyon, (1997), "An Analysis of Global Timber Markets." Discussion Paper 97-37, Washington, D.C.: Resources For the Future.
The Potential Role of Plantations in Future Timber Supply (PDF)
- Brent Sohngen and Roger Sedjo
- This paper presents results from a recently developed dynamic timber market model of the world. The baseline results suggest that prices will rise 0.8% per year between 1995 and 2050. Harvests will rise to meet demand, although most of the growth in timber harvests is predicted to result from the expansion of emerging subtropical region plantations. This growth in harvests from emerging subtropical region plantations reduces pressure on currently inaccessible forests, and leaves them largely intact. Several alternative scenarios are presented to show how these results are sensitive to the rate of growth of timber demand, prices, and costs of establishing plantations and harvesting inaccessible forests.
A Comparison of Timber Market Models: Static Simulation and Optimal Control Approaches.
- Brent Sohngen and Roger Sedjo
- Forest Science, 44(1): 24-36 (1998)
- In this paper, we compare and contrast two types of timber models that have been used to analyze the market impacts of policy proposals or exogenous forces that affect timber markets. The framework and theory for static simulation and optimal control models are presented and discussed. We then compare single region, empirical versions of the models across six scenarios of exogenous economic shocks. The models are found to predict different outcomes for timber market behavior when demand changes, or when young timber is affected by a supply shock. Similar outcomes between the models are obtained when older timber stocks are affected by shocks, or when the exogenous forces impact timber markets gradually over time.
- An earlier version of this paper can be found at: Sohngen, B. and R. Sedjo, (1996), "A Comparison of Timber Models for Use in Public Policy Analysis." Dicussion Paper 96-12, Washington, D.C.: Resources For the Future.
An Assessment of Four Large Scale Timber Models (PDF)
- Brent Sohngen
- Differences in timber market models that arise from alternative assumptions and fundamental differences in theory and structure can lead to disparate published results, as well as confusion among policy analysts and industry. This paper presents a thorough comparison of four widely used models, and then analyzes a set of published market predictions relative to historical data. The goal is to understand how fundamental differences between the models may affect market predictions. Several conclusions are drawn. First, market outlooks are largely a function of exogenous demand growth and timberland management assumptions, although differences in theory and structure are important. Second, spatial equilibrium models adapt to changing conditions by shifting price growth from region to region, while dynamic optimization models shift harvest quantities. Finally, model output must be assessed carefully, and often with a thorough understanding of input assumptions and alternative scenarios.
Timber Market Impacts of Climate Change
"Impacts of Climate Change on Forest Product Markets: Implications for North American Producers"
B. Sohngen and R. Sedjo. (2005)
The Forestry Chronicle. 81(5): 669 - 674 (September/October, 2005)
This paper examines potential climate change impacts in North American timber markets. The results indicate that climate change could increase productivity in forests in North America, increase productivity in forests globally, and reduce timber prices. North American consumers generally will gain from the potential changes, but producers could lose welfare. If dieback resulting from additional forest fires, increased pest infestation, or storm damage increases appreciably and has market effects, consumers will gain less and producers will lose more than if climate change simply increases the annual flow of timber products by raising forest productivity. Annual producer welfare losses from climate change in the North American timber sector are estimated to range from $1.4 - $2.1 billion per year on average over the next century, with the higher number resulting from potential large-scale dieback. Within North America, existing studies suggest that producers in northern regions are less susceptible to climate change impacts than producers in southern regions because many climate and ecological models suggest that climate become dryer in the U.S. South.
Valuing the Market Impact of Large Scale Ecological Change: The Effect of Climate Change on US Timber.
- Brent Sohngen and Robert Mendelsohn
- American Economic Review, 1998, 88(4): 689 - 710.
- This paper establishes a methodology for valuing the impact of large scale ecological changes in a market. Given the large capital stocks inherent in most ecological systems, the dynamic nature of most ecological change, and the dynamic response of markets, it is critical to build dynamic models to capture the resulting effects. This paper demonstrates how to construct such a model using the impacts of climate change on US timber markets as an example. Across a wide range of scenarios and models, warming is predicted to expand timber supplies and thus benefit US timber markets.
Predicting CO2 Emissions from Forests During Climate Change: A Comparison of Human and Natural Response Models.
- Brent Sohngen, Robert Mendelsohn, and Ronald Neilson.
- Ambio, 1998, 27(7): 509-513
- This paper compares transient carbon fluxes to and from forests during climatic change in a pure natural model of ecosystem adjustment and also in a model that captures the human response to these changes. Both models incorporate forest dieback and regeneration, forest redistribution, and changes in ecosystem production during climatic change. The natural model predicts that forested ecosystems in the United States will release 2.5 to 6.3 Pg carbon during the next 7 decades under climatic change. The model including human response shows that markets will mitigate, and even reverse, these fluxes by managing some forests for timber and storing carbon in wood products.
The Effects of Climate Change on Global Timber Markets (PDF)
- Brent Sohngen, Robert Mendelsohn, and Roger Sedjo. (1998)
- Ecological models predict that climate change will have widespread impacts on the distribution and growth of forests around the globe. This paper carefully links these impacts to a dynamic global timber market model in order to determine how markets will adapt to these changes. The results suggest that climate change will expand long term global timber supply, timber prices will fall, and the welfare from timber will increase between 3.0 and 6.7%. Although global harvests increase, the area of both industrial and remaining inaccessible wilderness forests expands during climate. Consumers in all regions benefit from lower prices, but producer welfare varies from region to region. In general, producer surplus in developing countries rises while it declines in developed countries.
- Appendix A
- Appendix B
- A later version of this paper is available in: Journal of Agricultural and Resource Economics. 26(2): 326-343.
Other Publications
Sohngen, B., R. Sedjo, R. Mendelsohn, and K. Lyon, (1997), "The Role of Human Adaptation in Ameliorating the Impact of Climate Change on Global Timber Markets." Chapter 8 in Climate-change Mitigation and European Land-use Policies, Eds. W.N. Adger, D. Pettenella, M. Whitby. Wallingford, U.K.: CAB International.
Last Updated: 07/13/07
