Achieving Environmental Sustainability through Fiscal Policy
Critical Issues in Environmental Taxation series
Edited by Larry Kreiser, Julsuchada Sirisom, Hope Ashiabor and Janet E. Milne
Chapter 11: The Use of Market based Mechanisms to Bolster Forest Carbon
Celeste M. Black1 I. INTRODUCTION Forestry activities have an important role to play in addressing the challenges of climate change. Deforestation contributes significantly to greenhouse gas emissions2 whilst afforestation and reforestation provide an opportunity to remove carbon from the atmosphere through the establishment of carbon sinks.3 Market-based mechanisms can be used in a variety of ways to encourage the establishment of new forests. Afforestation projects can generate carbon offsets under the Clean Development Mechanism (CDM) and domestic-level incentives can include generous tax treatment of expenses, direct grants and the generation of forest offsets. The conservation of existing forests can also be supported. One example of a measure with significant promise is the proposed Reducing Emissions from Deforestation and Degradation (REDD) mechanism.4 This chapter focuses on market mechanisms that have been developed at a domestic level in Australia and New Zealand as these jurisdictions have developed a range of different approaches to incentivize the establishment and maintenance of forests.5 By way of background, the chapter commences with an overview of the potential role of forestry in responding to climate change. It then analyses the market-based incentives developed in Australia and New Zealand to encourage forestry establishment and maintenance. A critical comparison of the mechanisms follows. 150 Columns Design XML Ltd / Job: Kreiser_X / Division: KETCCX_11 /Pg. Position: 1 / Date: 16/8 JOBNAME: Kreiser X PAGE: 2 SESS: 39 OUTPUT: Tue Aug 23 11:55:19 2011 The use of market based mechanisms to bolster forest carbon 151 II....
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