The Time Value of Carbon Storage

36 Pages Posted: 16 Jun 2022 Last revised: 2 Oct 2022

See all articles by Zack Parisa

Zack Parisa

affiliation not provided to SSRN

Eric Marland

Appalachian State University

Brent Sohngen

Ohio State University (OSU) - Department of Agricultural, Environmental & Development Economics

Gregg Marland

Appalachian State University - Research Institute for Environment, Energy and Economics

Jennifer Jenkins

affiliation not provided to SSRN

Date Written: September 1, 2021

Abstract

Widespread concern about the risks of global climate change is increasingly focused on the urgent need for action, and natural climate solutions are a critical component of global strategies to achieve low temperature targets. Yet to date, the full potential of natural systems to store carbon has not been leveraged because policymakers have required long-term contracts to compensate for permanence concerns, and these long-term contracts substantially raise costs and limit deployment. In this paper, we lay out the rationale that our time preference for early action leads to the conclusion that multiple tons of short-term storage of carbon in ecosystem stocks can be considered to have equal value – as measured by the social cost of carbon -- as 1 ton of carbon sequestered permanently. This equivalence can be used to quantify the value of short-term carbon storage, thereby removing one of the most significant barriers to participation in the carbon market and enabling the full climate mitigation potential of the land sector to be realized.

Keywords: carbon, discounting, time value, ton-years, short-term storage

JEL Classification: Q23, Q24, Q40, Q54

Suggested Citation

Parisa, Zack and Marland, Eric and Sohngen, Brent L. and Marland, Gregg and Jenkins, Jennifer, The Time Value of Carbon Storage (September 1, 2021). Available at SSRN: https://ssrn.com/abstract=4138229 or http://dx.doi.org/10.2139/ssrn.4138229

Zack Parisa

affiliation not provided to SSRN ( email )

No Address Available

Eric Marland

Appalachian State University ( email )

Boone, NC 28608
United States

Brent L. Sohngen (Contact Author)

Ohio State University (OSU) - Department of Agricultural, Environmental & Development Economics ( email )

2120 Fyffe Rd
Ag Admin
Columbus, OH 43210-1067
United States

Gregg Marland

Appalachian State University - Research Institute for Environment, Energy and Economics ( email )

Box 3213
Boone, NC 28608-2131
United States

Jennifer Jenkins

affiliation not provided to SSRN ( email )

No Address Available

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