The economic implications of carbon accounting methods for the profitability of agroforestry systems
Oscar Cacho and Robyn Hean
Contributed Paper to the 30th Annual Conference of Economists
The University of Western Australia, Perth, 23-26th September 2001
In recent years there has been increasing international concern about the emission
of greenhouse gases, particularly carbon dioxide. Eventually, an international
agreement will likely be enacted to reduce greenhouse gas emission levels and
assign rules for emission trading within and between countries. Technological
advances in the energy sector will provide for permanent mitigation of emissions,
while land-use change and forestry (LUCF) projects may have a temporary effect
since they will release carbon back into the atmosphere upon harvest. Nevertheless,
LUCF projects provide the opportunity to "buy time" until more permanent
technologies for reducing emissions become available.
Several methods to account for carbon sequestration in LUCF projects have been
proposed. These methods vary in their data requirements, accuracy and the level
of credits assigned to landholders and, therefore, will produce different outcomes
in terms of land use and reforestation. The Intergovernmental Panel on Climate
Change considers six methods, ranging from simple accounting of stock changes
during a commitment period, to various forms of tonne-year approaches that adopt
a two-dimensional measurement unit reflecting both carbon storage and time.
In this paper, the consequences of adopting different approaches are evaluated,
in a normative context, based on simulation of Australian farm-forestry systems.