Mrgret Köthke, Mtthis Dieter Institute of Forest Bsed Sector Economics Effects of crbon sequestrtion rewrds on forest mngement - n empiricl ppliction of djusted Fustmnn-Formuls hird Interntionl Fustmnn Symposium, October 29-31, 2009, Drmstdt 1
Bckground Crbon sequestrtion cpcity of forests Considertions to implement rewrd schemes in individul countries (potentil schemes e.g. certifictes, subsidies) Accounting pproches not yet decided 2
Aim of the study Anlysis of the effects of crbon sequestrtion rewrds on forest mngement Exemplry nlysis Min focus: Certifictes s rewrd scheme Different ccounting pproches Effects on optiml rottion period nd lnd expecttion vlue (LEV) 3
m³/h/yer m³/h Method Adjusted Fustmnn-Formul Comprtive sttic nlysis of single stnds (here spruce stnd) Spruce stnd, selective thinning Spruce stnd, selective thinning men nnul thinnings growing stock 30 nnul increment 3500 totl growth cpcity 25 3000 20 15 10 5 2500 2000 1500 1000 500 0 5 55 105 155 205 255 0 5 55 105 155 205 255 stnd ge [] stnd ge [] 4
Rewrd scheme certifictes: Crbon ccounting pproches Performnce bsed instrument (ccounting per t C sequestered/emitted) Rewrd for crbon sequestrtion (credits) Penliztion of crbon emission (debits) Differentition in the lloction of the duty to ccount for the emission (inclusion of hrvested wood products) 5
Crbon ccounting pproches Crbon ccounting pproch No Cert Credits Debits / / Cert1 For increment volume (nnully) For hrvest volume t time of hrvest Cert2 For increment volume (nnully) / Cert3 For increment volume (nnully) For hrvest volume t the end of life of hrvested wood 6
Forest vlution Lnd expecttion vlue (LEV) with crbon crediting LEV Vh 1 ( Vt (1 r /100) (1 r ) /100) c 1 (1 r /100) Vc Vc: net vlue of crbon crediting [ /h] Vh: net vlue of finl timber hrvest (free from hrvesting costs) [ /h] Vt: net returns from thinning (free from hrvesting costs) [ /h] c: regenertion cost [ /h] r: interest rte : rottion ge [yers] : period under considertion [yers] 7
Forest vlution Cert1 (debit t time of hrvest) Vc 1 i Cert2 (no debit) Vc 1 i * cp (1 * cp (1 r /100) r /100) Cert3 (debit t end of lifespn) Vc 1 i * cp (1 r /100) 1 1 e e * cp * cp (1 (1 r /100) r /100) ( w) Vc: net vlue of crbon crediting [ /h] i: gross nnul crbon increment [t C/h/yer] e: crbon content of nnul wood removl (thinning, hrvest or mortlity) [t C/h/yer] cp: crbon price [ /t C] r: interest rte : rottion ge [yers] : period under considertion [yers] w: lifespn of hrvested wood (products) [yers] 8
LEV ( /h) MAI (m³) Development of the LEV he LEV under different crbon ccounting schemes nd development of the men nnul increment (MAI) Spruce stnd, crbon price 34 /t CO 2, interest rte 2% 30000 25000 20000 15000 10000 5000 20 15 10 5 Cert1: debit t time of hrvest Cert2: no debit Cert3: debit t end of lifespn (here verge 30 yers) 0-5000 -10000-15000 0 50 100 150 200 250 no Cert Cert1 Cert2 Cert3 MAI stnd ge [] 0-5 -10 9
rottion ge [] he effect of crbon prices on the optiml rottion ge nd the mximum lnd expecttion vlue (LEVmx). Spruce stnd, interest rte 2% Cert1 Cert2 Cert3 250 200 150 100 Cert1: debit t time of hrvest Cert2: no debit Cert3: debit t end of lifespn (here verge 30 yers) 50 0 0 50 100 crbon price /t CO 2 10
rottion ge [] he effect of the interest rte on the optiml rottion ge nd the mximum lnd expecttion vlue (LEVmx). Spruce stnd, crbon price 34 /t CO 2 no Cert Cert1 Cert2 250 200 Cert1: debit t time of hrvest Cert2: no debit 150 100 50 0 0 2 4 6 8 10 interest rte (%) 11
rottion ge [] Interreltion between crbon price nd interest rte he effect of crbon prices on the optiml rottion ge for different interest rtes 250 Cert2 Cert2: credit for increment volume, no debit 200 1% 150 2% 100 50 4% 0 0 20 40 60 80 100 crbon price /t CO 2 Spruce stnd 12
rottion ge [] Interreltion between crbon price nd interest rte he effect of crbon prices on the optiml rottion ge for different interest rtes 250 200 Cert1 1% Cert1: credit for increment volume, debit for hrvest volume t time of hrvest 150 2% 100 50 4% 0 0 20 40 60 80 100 crbon price /t CO 2 Spruce stnd 13
Conclusions (1) Rewrding crbon sequestrtion by certifictes rises profitbility leds to shifts in optiml rottion ge Chrge of hrvest volume with emission debits postpones the optiml rottion ge (emission debits offset revenues from wood use) he lower nd lter the debit is chrged, the lower is the postponing effect on the rottion ge Interreltion of interest rtes nd crbon prices: the interest rte my hve shortening or prolonging effect on the optiml rottion period subject to the level of crbon prices 14
Conclusions (2) Policy impliction Performnce bsed rewrding instruments potentilly chnge rottion periods relted forest services (timber production, contribution to biodiversity conservtion, climte chnge mitigtion etc.) 15
Conclusions (3) Restrictions Finding pplies for profit-oriented forest owners only Actully existing unequl ge clss distribution my led to differing results Dynmic modelling for specific cse studies 16
hnk you for your ttention! Dr. Mtthis Dieter, Mrgret Köthke Johnn Heinrich von hünen-institut (vi) Federl Reserch Institute for Rurl Ares, Forestry nd Fisheries Institute of Forest Bsed Sector Economics Leuschnerstrße 91, D-21031 Hmburg mtthis.dieter@vti.bund.de, mrgret.koethke@vti.bund.de el. ++49-40 739 62 301, Fx -399 www.vti.bund.de 17