GHG Mitigation Potential, Costs and Benefits in Global Forests: A Dynamic Partial Equilibrium Approach

This paper reports on the global potential for carbon sequestration in forest plantations, and the reduction of carbon emissions from deforestation, in response to six carbon price scenarios from 2000 to 2100. These carbon price scenarios cover a range typically seen in global integrated assessment models. The world forest sector was disaggregated into ten regions: four largely temperate, developed regions: the European Union, Oceania, Russia, and the United States; and six developing, mostly tropical, regions: Africa, Central America, China, India, Rest of Asia, and South America. Three mitigation options (long- and short-rotation forestry, and the reduction of deforestation) were analysed using a global dynamic partial equilibrium model (GCOMAP).

The paper provides the following key findings:

• By 2100, for six carbon price scenarios, the model estimates a global gain in carbon benefits between 50.9 Gt C and 113.2 Gt C.
• The time profile of carbon gains follows the carbon price trajectory: higher carbon prices early lead to earlier carbon gain and vice versa
• Reduced deforestation emerges as a dominant mitigation option. It accounts for 51 to 78% of modelled carbon gains by 2100.
• The estimated present value of cumulative welfare change in the sector ranges from a decline of $158 billion to a gain of $81 billion by 2100. The decline is associated with a decrease in deforestation.

The paper recommends that:

• Avoiding deforestation could be a significant, near-term option in Africa in particular.
• Land use competition among the forest, agriculture and grazing sectors is needed to improve land availability assumptions.
  
• A better determination of the availability of wastelands in the tropics (estimated in GCOMAP, but not in some other sectoral and CGE models) would strengthen estimates of the quantity and cost of what appear to be very large-scale forestation mitigation options in tropical regions.
• The use of biofuel timber products as a substitute for fossil fuels offers a way to greatly expand the potential for carbon mitigation from forestry.
• Improved, regionally disaggregated data are needed on the price elasticity of forest land, and the elasticities of timber demand and supply.
• Mitigation activities to reduce emissions or increase sequestration in the land use sector will need to address the timing (i.e. the start and duration) as well as magnitude of economic incentives, since delays in incentives tend to delay land use change decisions.