The Potential of REDD+ for Carbon Sequestration in Tropical Forests: Supply Curves for Carbon Storage for Kalimantan, Indonesia

40 Pages Posted: 15 Jan 2016

See all articles by Yonky Indrajaya

Yonky Indrajaya

Wageningen UR

Edwin van der Werf

Wageningen UR - Environmental Economics and Natural Resources Group

Hans-Peter Weikard

Wageningen UR - School of Social Sciences

Frits Mohren

Wageningen UR

Ekko van Ierland

Wageningen UR - Environmental Economics and Natural Resources Group

Date Written: January 14, 2016

Abstract

We study the potential of tropical multi-age multi-species forests for sequestering carbon in response to financial incentives from REDD+. The use of reduced impact logging techniques (RIL) allows a forest owner to apply for carbon credits whereas the use of conventional logging techniques (CL) does not. This paper is the first to develop a Hartman model with selective cutting in this setting that takes additionality of carbon sequestration explicitly into account. We apply the model using data for Kalimantan, Indonesia. RIL leads to less damages on the residual stand than CL and has lower variable but higher fixed costs. We find that a system of carbon credits through REDD+ has a large potential for carbon storage. Interestingly, awarding carbon credits to carbon stored in end-use wood products does not increase the amount of carbon stored and reduces Land Expectation Value. We also observe that the level of the carbon price at which it becomes optimal not to harvest depends on the interpretation of the steady state model.

Keywords: REDD, Carbon Credits, Carbon Sequestration, Sustainable Forest Management, Reduced Impact Logging, Optimal Forest Management, Carbon Price

JEL Classification: Q2, Q23

Suggested Citation

Indrajaya, Yonky and van der Werf, Edwin and Weikard, Hans-Peter and Mohren, Frits and van Ierland, Ekko C., The Potential of REDD+ for Carbon Sequestration in Tropical Forests: Supply Curves for Carbon Storage for Kalimantan, Indonesia (January 14, 2016). FEEM Working Paper No. 81.2015, Available at SSRN: https://ssrn.com/abstract=2715430 or http://dx.doi.org/10.2139/ssrn.2715430

Yonky Indrajaya

Wageningen UR ( email )

Hollandseweg 1
Wageningen, 6706KN
Netherlands

Edwin Van der Werf (Contact Author)

Wageningen UR - Environmental Economics and Natural Resources Group ( email )

P.O. Box 8130
Wageningen, 6700 EW
Netherlands

Hans-Peter Weikard

Wageningen UR - School of Social Sciences ( email )

De Leeuwenborch
Hollandseweg 1
6706 KN Wageningen
Netherlands
+31 317 48 24 94 (Phone)
+31 317 48 49 33 (Fax)

Frits Mohren

Wageningen UR ( email )

Hollandseweg 1
Wageningen, 6706KN
Netherlands

Ekko C. Van Ierland

Wageningen UR - Environmental Economics and Natural Resources Group ( email )

P.O. Box 8130
Wageningen, 6700 EW
Netherlands

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