Geoscience Reference
In-Depth Information
recently released most comprehensive assessment of forests ever, puts deforestation at
about 12.9 mil. ha per year (FAO, 2005). At the same time, forest planting, landscape
restoration, and natural expansion of forests reduce the net loss of forest area. Net
change in forest area in the period 2000-2005 is estimated at 7.3 million hectares per
year (FAO, 2005). This reduces the annual GHG emissions to an estimated 1.1 GtC.
In comparison, 7.3 GtC were emitted in 2003 by using fossil energy sources (Marland
et al., 2006).
Deforestation has been diffi cult to tackle by governments, as its drivers are com-
plex and many land uses yield higher revenues than those from forested land. Some
see climate policy as a new opportunity to effectively reduce a major source of GHGs
and biodiversity loss as well as to increase incomes of many people in rural areas
whose livelihood depends on forests. The implementation of measures avoiding de-
forestation would require innovative fi nancial mechanisms in the context of global
climate policies. In this chapter we study the potential magnitude of effects of different
fi nancial mechanisms to help reduce deforestation, using a modeling approach.
To estimate the impact of fi nancial incentives, to reduce deforestation and assum-
ing profi t maximizing behavior, we calculate differences in net present value of dif-
ferent land uses using a spatially explicit integrated biophysical and socio-economic
land use model. Key model parameters, such as agricultural land use and production,
population growth, deforestation, and forest product consumption rates were calibrat-
ed against historical rates. Land use changes are simulated in the model as a decision
based on a difference between net present value of income from production on agri-
cultural land versus net present value of income from forest products. Assuming fi xed
technology, the model calculates for each 0.5° grid cell the net present value difference
between agricultural and forest land-uses in 1-year time steps. When carbon market
prices, transferred through a fi nancial mechanism, balance out differences between the
net present value of agricultural land and forest-related income, it is assumed, consis-
tent with profi t maximizing behavior, that deforestation is avoided.
The net present value difference of forest versus other land uses can be balanced
out through two mechanisms. One is to reduce the difference by adding costs to con-
version through taxing emissions from deforestation, for example, through a land
clearance tax and wood sales taxes. The other is to enhance the value of the existing
forest by fi nancial support when keeping the forest carbon stock, to be paid in certain
time intervals. In both cases the value of forest carbon stock would be pegged to car-
bon market prices. The modeling results for different hypothetical tax or subsidy levels
show the potential magnitude of avoided deforestation through fi nancial incentive or
disincentive mechanisms. The model results are annual, spatially explicit estimates of
the forest area, and biomass development from 2000 to 2100, with particular focus on
the period 2006-2025.
MATERIALS AND METHODS
The model is based mainly on the global afforestation model of (Benítez and Obersteiner,
2006) and calculates the net present value of forestry with equation (1-16) and the net
present value of agriculture with equation (17-20). Main drivers for the net present value
