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A modified production possibility frontier for efficient forestry management under the New Zealand Emissions Trading Scheme
Author(s) -
Hale Todd,
Kahui Viktoria,
Farhat Daniel
Publication year - 2015
Publication title -
australian journal of agricultural and resource economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.683
H-Index - 49
eISSN - 1467-8489
pISSN - 1364-985X
DOI - 10.1111/1467-8489.12047
Subject(s) - carbon sequestration , natural resource economics , wood production , carbon sink , revenue , production (economics) , biomass (ecology) , carbon fibers , forest management , woodland , carbon price , frontier , agriculture , forestry , opportunity cost , business , greenhouse gas , agroforestry , environmental science , economics , climate change , geography , ecology , carbon dioxide , materials science , archaeology , composite number , composite material , biology , accounting , macroeconomics , neoclassical economics
Carbon sequestered through increased forest biomass provides a low cost means to curb emissions and has become a major focus of New Zealand's Emissions Trading Scheme. We present a forest planning optimisation model where land use is governed by forest owners maximising the returns to both timber harvest and carbon sequestration. By varying carbon prices, we model efficient trade‐offs between the two forest activities along a modified production possibility frontier for four distinct wood supply regions in New Zealand. Results show that while more productive regions such as the Central North Island ( CNI ) and Northland have a greater capacity as a carbon sink, it is the less productive regions that have a comparative advantage in carbon sequestration in terms of a lower cost of wood production revenue foregone. However, moderate increases in carbon uptake can be achieved in the CNI at low opportunity cost by subtle changes in forestry management. The implication for policy‐makers is that initial increases in carbon sequestration will be achieved at the lowest cost to society by favouring high volume timber production in some productive woodland areas and/or by more carbon farming in less productive areas.