Sustainable Forest Management and Global Climate Change

Sustainable Forest Management and Global Climate Change

Selected Case Studies from the Americas

Edited by Mohammed H.I. Dore and Rubén Guevara

The UN Framework Convention on Climate Change recognises that, in the formulation of a global strategy for reducing global emissions of carbon (the main factor in global warming) forests could play an important role. This book highlights that role and demonstrates how the forests of the world may be harvested judiciously and sustainably. The authors argue that the forests are more than just a source of timber and wood; they discuss the role that forests play in reducing global warming, in preventing soil erosion and in helping to minimise the loss of biodiversity. Drawing on the expertise of contributors associated with the analysis of forests, this book is an in depth and fascinating discussion as well as a policy guide for the sustainable management of forests.

Chapter 4: The carbon cycle and the value of forests as a carbon sink: a boreal case study

Mohammed Dore and Mark Johnston

Subjects: economics and finance, environmental economics, environment, climate change, environmental economics, management natural resources

Extract

Mohammed Dore and Mark Johnston INTRODUCTION In the theory of renewable and non-renewable natural resources, what is the appropriate concept of scarcity rent? How is this rent likely to change over time? A review of literature on this subject shows that a number of economists have divergent views. Brown and Field (1978) and Fisher (1979) argue that measures of scarcity suffer from serious conceptual shortcomings. If attention is confined to exhaustible resources, even here, what constitutes scarcity rent (or ‘user cost’ or ‘royalty rate’) and how it changes over time remains controversial. In the standard Hotelling model, it is argued that the scarcity rent rises monotonically over time at the social rate of discount. In contrast, both Heal (1976) and Hanson (1980), using very different cost functions, show that the scarcity rent must decline monotonically to zero, as the resource approaches exhaustion. On the other hand, Solow and Wan (1976) analyse conditions under which resource extraction costs rise with the depletion of higher-grade deposits and extraction turns to lower and lower-grade ores. They argue that along the optimal path the shadow price of a resource rises at the real rate of interest, but that the difference between price and marginal extraction cost, which they call ‘degradation cost’, declines monotonically over time to zero. The divergence of views is replicated in the empirical studies too. For instance, Barnett and Morse (1963), Barnett (1979) and Johnson et al. (1980) all find that unit extraction costs in real terms have declined, so...

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