Role of New Zealand Forests in Global Climate Change Mitigation

Environmental Economics and Policy,

Dr. Adam Daigneault Testimony to the House Committee on Small Business Subcommittee on Underserved, Agricultural, and Rural Development Hearing on “Sustainable Forestry’s Role in Climate Solutions”

Adam Daigneault, University of Maine E.L. Giddings Associate Professor of Forest Policy and Economics, testified Sept. 29 before a U.S. House of Representatives Committee on Small Business Subcommittee on Underserved, Agricultural, and Rural Development, chaired by Maine Rep. Jared Golden. A focus of the hearing was the role of sustainable forestry and how small businesses across this sector are helping to address climate change. Daigneault, whose research focuses on modelling economic impacts of environmental policy on the forestry and agricultural sectors, spoke about how we can manage U.S. forests for carbon, timber and other ecosystem services, and how we can use natural climate solutions and carbon markets to help forest-dependent economies grow

Emissions Trading and the Economic Impact of the Paris Agreement on New Zealand

A new international climate change agreement under the United Nations Framework Convention on Climate Change was concluded in Paris in December 2015. The Paris Agreement (PA) asserts that greenhouse gases (GHG) emission pathways should be consistent with holding the increase in global temperature below 1.5°C or 2°C above pre-industrial levels. New Zealand (NZ) has committed to reduce emissions to 30% below 2005 levels by 2030. The purpose of this paper is to estimate the economic costs from the PA terms when the mitigation potential relies on pricing/not pricing agricultural emissions and linking/not linking the NZ Emissions Tradable Scheme (NZ ETS) to other markets of emissions permits in Australia, the European Union and the United States. Through a general equilibrium model we find that NZ is capable of meeting the PA terms; however, GDP decreases by 7% below the baseline by 2030 because of the stringency of the targets. Although pricing agriculture and linking the NZ ETS to other emissions markets mitigates losses, linking to the European Union ETS may not be desirable because of significant losses on competitiveness. Results also show that linking to Australia or the US emissions markets mitigates compliance costs because of lower prices on emissions permits.

Optimal Forest Rotations with Environmental Values and Endogenous Fire Risk

This paper develops a model that solves for the optimal economic harvest rotation problem to maximize revenue of an even-aged forest plantation when there is a risk of a catastrophic forest fire. The paper also investigates the feasibility of using fire prone stands for carbon sequestration and estimates the effects that it would have on the optimal management regime and rotation age empirically using a typical Douglas-fir stand in the Pacific Northwest. The model incorporates risk-reducing management practices that allow risk and growth to be endogenous, and the optimal rotation model is solved using numerical simulation techniques. Results show that higher carbon prices increase the rotation length regardless of the probability of fire and that the frequency of risk-reducing management practices increase as the stand approaches the optimal harvest age. Results also indicate that intermediate fuel treatments can provide economical and environmental benefits, even with a high probability of fire.Carbon sequestration, Stochastic risk, Forest management, Optimal rotation, Silviculture, Forest fires, Climate change, Resource /Energy Economics and Policy,

Exchange Rates and the Competitiveness of the US Timber Sector in a Global Economy

This paper examines the competitiveness of the US timber industry under different exchange rate policies using a dynamic optimization model of global timber markets. We assume that exchange rates affect the cost structure of harvesting and managing forests and simulate the model for baseline conditions and four additional exchange rate policies. Two policies consider a strengthening United States dollar scenario and two policies examine weak South American currencies. Recently South America has increased its share of global timber production and is shipping increasing quantities of timber to the Unites States. The results indicate that US competitiveness in the forestry sector is sensitive both to strong US $policies and to the weak currency policies pursued by South American governments. A 20$ compared to all other currencies can reduce harvests by 4 7% in the United States over the next 50 years, while a similar reduction in currency values in South America can reduce U.S. production by around 0.4%. In dollar terms, each additional cubic meter of wood produced in South America due to currency policies can reduce producer surplus in the United States by $100.International Relations/Trade,

MODELING ALTERNATIVE POLICIES FOR GHG MITIGATION FROM FORESTRY AND AGRICULTURE

A key consideration for development of energy and climate policy affecting the forestry and agricultural sectors is that the selection of specific mechanisms implemented to achieve bioenergy production and/or greenhouse gas (GHG) mitigation targets may have substantial effects on landowner incentives to adopt alternative practices. For instance, the prices of allowances and offsets are expected to diverge under some policies being considered where there is a binding cap on the quantity of offsets from the agricultural and forest sectors. In addition, provisions that limit or exclude specific practices from receiving carbon payments will affect the quantity and cost of GHG mitigation opportunities available. In this study, the recently updated Forest and Agriculture Sector Optimization Model with GHGs (FASOMGHG) was used to estimate GHG mitigation potential for private land in the contiguous U.S. under a variety of GHG price policies. Model scenarios suggest that U.S. forestry and agriculture could provide mitigation of 200 – 1000 megatons carbon dioxide equivalent per year (Mt CO2e/year) at carbon prices of $15 to$50/tCO2e. Binding limits on offsets have increasingly large effects on both the total magnitude and distribution of GHG mitigation across options over time. In addition, discounting or excluding payments for forest sinks can reduce annualized land-based mitigation potential 37-90 percent relative to the full eligibility scenario whereas discounting or excluding agricultural practices reduces mitigation potential by less than 10 percent.Climate policy, energy policy, FASOMGHG, GHG mitigation, Agricultural and Food Policy, Environmental Economics and Policy, Resource /Energy Economics and Policy, C61, Q42, Q54,

Valuing the Economic Benefits of Conservation Land in Downeast Maine

This report uses an ecosystem services approach to calculate the economic value of conservation lands in Downeast Maine, an area composed of Hancock and Washington Counties. This region, roughly bordered by the Atlantic Ocean, the Penobscot River, and Canada, includes extensive coastline, thousands of acres of forestland, areas of agricultural land, mountains, lakes, rivers, and wetlands. The area is known for its recreational and aesthetic resources, and productive offshore areas. Employment centers range from the tourism-dominated area of Bar Harbor in Hancock County, adjacent to Acadia National Park, to the Baileyville tissue mill and Woodland pulp mill area in Washington County. Overall, it remains one of the least developed areas of Maine

Enhancing the tax system to halt the decline of nature in New Zealand

New Zealand is world-renowned for its nature – its lush forests, spectacular mountain landscapes, wild and scenic rivers, beautiful coastlines and extraordinary biodiversity.  This natural heritage is the foundation of New Zealand’s identity and its branding, and the premier attraction for the tourism industry. It provides habitable environments, contributes to economic production and assimilates wastes, and is an important source of great enjoyment, health and well-being (Roberts et al., 2015). Nature contributes to the success of the nation’s fishing, farming, forestry and tourism industries, which provide about 52% of national export income (Ministry of Business, Innovation and Employment, 2013). But these values and the well-being and prosperity they enable are being diminished and degraded  at an alarming rate.&nbsp

Coordinated river infrastructure decisions improve net social-ecological benefits

We explore the social, ecological, economic, and technical dimensions of sustainable river infrastructure development and the potential benefits of coordinating decisions such as dam removal and stream crossing improvement. Dam removal is common practice for restoring river habitat connectivity and ecosystem health. However, stream crossings such as culverts are often 15 times more abundant than dams and may pose similar ecological impacts. Using multi-objective optimization for a model system of 6100 dams and culverts in Maine, USA, we demonstrate substantial benefit-cost improvements provided by coordinating habitat connectivity decisions. Benefit-cost efficiency improves by two orders of magnitude when coordinating more decisions across wider areas, but this approach may cause inequitable resource distribution. Culvert upgrades improve roadway safety and habitat connectivity, creating cost-effective opportunities for coordinating and cost-sharing projects between conservationists and safety managers. Benefit-cost trends indicate significant overlaps in habitat and safety goals, encouraging flexible stakeholder collaborations and cost-sharing strategies