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Avoided Deforestation as a Greenhouse Gas Mitigation Tool: Economic Issues

^a Dep. of Agricultural, Environmental, and Development Economics, The Ohio State Univ., 2120 Fyffe Rd., Columbus, OH 43210
^b Food and Agricultural Policy Research Program, RTI International, 3040 Cornwallis Rd., Research Triangle Park, NC, 27709
^c performed this work while at the USEPA Climate Change Div., and is now at the World Bank, Carbon Finance Unit, 1818 H St, NW Room MC3-835, Washington, DC 20433. The author's views do not represent those of the World Bank

^* Corresponding author (sohngen.1{at}osu.edu).

Received for publication June 1, 2007. Tropical deforestation is a significant contributor to accumulation of greenhouse gases (GHGs) in the atmosphere. GHG emissions from deforestation in the tropics were in the range of 1 to 2 Pg C yr^–1 for the 1990s, which is equivalent to as much as 25% of global anthropogenic GHG emissions. While there is growing interest in providing incentives to avoid deforestation and consequently reduce net carbon emissions, there is limited information available on the potential costs of these activities. This paper uses a global forestry and land use model to analyze the potential marginal costs of reducing net carbon emissions by avoiding deforestation in tropical countries. Our estimates suggest that about 0.1 Pg C yr^–1 of emissions reductions could be obtained over the next 30 to 50 yr for $5 per Mg C, and about 1.6 Pg C yr^–1 could be obtained over the same time frame for $100 per Mg C. In addition, the effects of carbon incentives on land use could be substantial. Relative to projected baseline conditions, we find that there would be around 3 million additional hectares (ha) of forestland in 2055 at $5 per Mg C and 422 million ha at $100 per Mg C. Estimates of reductions in area deforested, GHG mitigation potential, and annual land rental payments required are presented, all of which vary by region, carbon price paid, and time frame of mitigation.

Abbreviations: GHG, greenhouse gas • GTM, Global Timber Model • UNFCCC, United Nations Framework Convention on Climate Change