Paying for forest carbon or stimulating fuelwood demand? Insights from the French Forest Sector Model

• Published in: Journal of forest economics Vol. 17; no. 2; pp. 157 - 168
• Main Authors: Lecocq, Franck, Caurla, Sylvain, Delacote, Philippe, Barkaoui, Ahmed, Sauquet, Alexandre
• Format: Journal Article
• Language: English
• Published: Umea Elsevier GmbH 01.01.2011; Elsevier; Now Publishers Inc
• Series: Journal of Forest Economics
• Subjects: Agricultural sciences; biomass; Biomass energy; Carbon; carbon markets; Carbon sequestration; Carbon storage; Carbon storage Biomass energy Forest sector modeling; Economic models; Economics and Finance; Energy policy; Forest management; Forest sector modeling; Forestry economics; Forests; fossil fuels; fuelwood; greenhouse gas emissions; Humanities and Social Sciences; issues and policy; Life Sciences; politics; Silviculture, forestry; Studies; France; Q54; Q23; Biomass energy; Carbon storage; L52; Forest sector modeling; Q42; ECONOMIE FORESTIERE; CARBON STORAGE; BIOMASS ENERGY; FOREST SECTOR MODELING
• ISSN: 1104-6899; 1618-1530
• DOI: 10.1016/j.jfe.2011.02.011

As European countries move towards steeper cuts in greenhouse gases emissions, questions are mounting, in the forest sector, about the best balance between policies that favor carbon sequestration in biomass, and policies that favor fossil-fuel substitution, with potentially conflicting implications for forest management. We provide insights on this debate by comparing the environmental and economic implications for the French forest sector of a “stock” policy (payment for sequestration in situ), a “substitution” policy (subsidy to fuelwood consumption), and a combination thereof – all calibrated on the same price of carbon. To do so, we use the French Forest Sector Model (FFSM), which combines a dynamic model of French timber resource and a dynamic partial-equilibrium model of the French forest sector. Simulations over the 2010–2020 period show that the stock policy is the only one that performs better than business-as-usual in terms of carbon. In the substitution policy, cumulative substitution benefits are not sufficient to offset carbon losses in standing forests over this biologically short, but politically relevant period of time. And the combination policy does not perform better. However, the stock policy has negative impacts on consumers welfare, its costs are increasing over time as carbon is accumulated, and it raises political economy questions about the negotiability of the reference against which excess carbon is measured.