Quantifying Potentential Benefits of Carbon Market Participation for Owners of Pennsylvania Oak Stands

Open Access
Yang, Chieh-chung
Graduate Program:
Forest Resources
Master of Science
Document Type:
Master Thesis
Date of Defense:
May 30, 2014
Committee Members:
  • Marc Eric Mcdill, Thesis Advisor
  • Oak stands
  • Pennsylvania
  • carbon credit
  • carbon benefits
  • CAR
In United States, voluntary and mandatory state-level carbon trading programs are multiplying that allow forest landowners to be compensated for carbon sequestered by their forests. Forests are a potential carbon sink, and certain forest management activities can effectively result in increased carbon sequestration. This study tries to answer two questions: 1) Can owners of oak forest stands in Pennsylvania benefit by participating in carbon markets and are the benefits sufficient to induce participation? And 2) If so, to what extent and how would participation in carbon markets change the management behavior of Pennsylvania oak forest owners? In order to answer these questions, two objectives are addressed: First, apply the CAR Forest Project Protocol to a variety of Pennsylvania oak forest management scenarios on a sample of oak forest stands that vary in terms of age, site quality and stocking. Second, Evaluate how participation in CAR would affect the profitability of each management scenario and, if so, how participation would likely change the preferred management practice for each stand. Thirty-six oak plots in Pennsylvania were selected from the Forest Inventory and Analysis (FIA) database, with two from each of 18 groups based on Stand Age, Basal Area, and Site Condition. Seven management alternatives (two even-aged alternatives, four uneven-aged alternatives, and a No Management alternative) were simulated for each of the sampled plots using the Forest Vegetation Simulator (FVS). Carbon credits, or Climate Reserve Tonnes (CRTs), were calculated for each plot and management scenario using the Forest Project Protocol from CAR. The Shelterwood 80 (SW 80) management alternative was designated as the baseline scenario. The present value of the CRTs were calculated based on two carbon prices ($10 tCO2e and $30 tCO2e) and discounted rates (4% and 6%). In addition, the present value of timber harvests was also calculated for each plot and management scenario. Negative quantified removals were addressed by assuming that each plot/stand was part of a larger ownership and that negative removals are offset by positive removals on the rest of the property in any given year. Thus, no negative removals were carried over and no buffer pool was needed to account for reversals. This approach is referred to as the “enterprise-wide perspective.” Confidence deductions were also set at 10%. Total quantified removals are generally larger for the no management scenario and the SW120 scenario but are lower and often negative for the other treatments. When carbon price is at $10/ tCO2e and the discount rate is 4%, the present values of the projected carbon credits shows that No Mgt or U 30W management is probably the better choice for landowners interested in maximizing CRTs. However, uneven-aged management treatments tended to produce the greatest present values of timber revenues. At a carbon price of $10/tCO2e, timber values tend to be much larger than carbon values. However, at a carbon price of $30/ tCO2e, the No Mgt option produces nearly as much value from carbon alone as the timber values from other options. This finding suggests that raising carbon price could make the No Mgt become the best scenario even though it produces no timber revenue. The higher discount of 6% disproportionately negatively affects the management scenarios that favor waiting longer before harvesting and reduces the ability of carbon credits to shift the optimal management regime to longer rotations and waiting longer before harvesting. Some limitations of the analysis presented here include the lack of cost data and possible inaccuracies in the way FVS projects stand development under the uneven-aged management scenarios.