Long Term Versus Temporary Certified Emission Reductions in Forest Carbon-Sequestration Programs

Under the Clean Development Mechanism (CDM) of the Kyoto Protocol, forest projects can receive returns for carbon sequestration via two credit instruments: temporary (tCERs) or long-term certified emission reductions (lCERs). This article develops a theoretical model of optimal harvesting strategies that compares private optimal harvest decision under these two instruments. We find that risk neutral landowners are likely to prefer instituting lCERs over tCERs to maximize surplus. A particular type of early harvest penalty implemented under the lCERs is critical in determining the length of rotation intervals and the carbon credit supply. When this penalty is an increasing function of the difference in biomass before and after harvesting across verification periods, the landowner may choose longer or shorter rotation intervals compared to the Faustmann rotation. The resulting supply curve may have a backward bending region over a range of carbon prices.forest rotation, long term certified emission reductions (lCERs), carbon sequestration, Environmental Economics and Policy, Land Economics/Use, Resource /Energy Economics and Policy, Q2, Q54, Q23,

Long Term Versus Temporary Certified Emission Reductions in Forest Carbon-Sequestration Programs

Under the Clean Development Mechanism (CDM) of the Kyoto Protocol, forest projects can receive returns for carbon sequestration via two credit instruments: temporary (tCERs) or long-term certified emission reductions (lCERs). This article develops a theoretical model of optimal harvesting strategies that compares private optimal harvest decision under these two instruments. We find that risk neutral landowners are likely to prefer instituting lCERs over tCERs to maximize surplus. A particular type of early harvest penalty implemented under the lCERs is critical in determining the length of rotation intervals and the carbon credit supply. When this penalty is an increasing function of the difference in biomass before and after harvesting across verification periods, the landowner may choose longer or shorter rotation intervals compared to the Faustmann rotation. The resulting supply curve may have a backward bending region over a range of carbon prices.forest rotation, long term certified emission reductions (lCERs), carbon sequestration

ESSAYS ON REGULATION POLICY, WILDLIFE QUALITY, AND EXCESS DEMAND

The second chapter examines how both domestic and foreign tobacco regulations affect the flow of tobacco trade. I develop a gravity equation incorporating a comprehensive set of domestic and foreign tobacco regulations into a country's tobacco import demand and estimate their bilateral effects. The results suggest a country's tobacco imports are significantly affected by their trading partner's tobacco regulations. There are two important results: spatial regulations reduce tobacco trade regardless of trade direction and marketing regulations in importing countries may actually increase tobacco imports. These results highlight the importance of understand regulations in an increasingly multilateral economy.The third chapter investigates the effects of varying levels of access and excludability on a common pool resource with intrinsic quality characteristics. I analyze the case of deer hunting on leased properties by hunting clubs and estimate the lease size elasticity of both harvest and antler quality. The results suggest lease size has a small but significant effect. For all clubs with smaller than average hunting leases, a simulated increase to the average size results in approximately a 4.5 percent increase in the average antler quality of deer harvested. Although I analyze properties leased by hunting clubs, the results are applicable to various other management scenarios.The fourth chapter develops the relationship between excess demand and purchase options. I illustrate a mechanism allowing firms to smooth sales across periods with uncertain quality and increase expected profit over the market clearing strategy. By "underpricing" high quality goods and offering a purchase option guaranteeing a single price regardless of quality, firms create excess demand and increase consumer willingness to pay for their purchase option. The firm maximizes profit by choosing a guaranteed price low enough to create sufficient excess demand and consumer willingness to pay for the purchase option that markets clear when quality is low. Using a numeric example, I demonstrate a case where this behavior increases profit over the market clearing strategy

The Trade and Health Effects of Tobacco Regulations

We examine how cross-country differences in tobacco regulations affect tobacco imports and consumer health. We find that tobacco imports increase when a rich exporter’s tobacco regulations are stringent relative to the regulations of its poor importing trade partner. The main policy driver may be differences in marketing and counter-advertising tobacco regulations between trading partners. If a rich exporting country adopts counter-advertising tobacco regulations, mortality and morbidity from tobacco-related diseases in the poor importing country increase by four and eighty smokers per million people annually, respectively. Our results highlight the importance of accounting for spillovers in an increasingly multilateral economy

The Use of Electronic Payment Machines at Farmers Markets: Results from a Choice Experiment Study

The use of electronic payment machines offer vendors an alternative payment method which can increase farmers markets’ sales and customer base. In this study, we elicited the value that managers and vendors assign to different machines’ features. Also we estimated customers’ values on different markets’ features, including access to electronic payment machines. Managers were willing to pay for user-friendly machines, excellent customer service, and excellent quality machine technology. Customers were also willing to pay for excellent quality food, for vendors that are local farmers, and for an entertaining atmosphere. We found no evidence of customers willing to pay premium prices for having access to electronic payment machines at farmers markets. Findings from this study should be useful to those designing ways to implement electronic payment machines at farmers markets in order to increase adoption rates

Long-term versus temporary certified emission reductions in forest carbon sequestration programs

Under the Clean Development Mechanism (CDM) of the Kyoto Protocol, forest projects can receive returns for carbon sequestration via two crediting instruments: temporary or long-term certified emission reductions (tCERs or lCERs). This study shows the effect of lCERs on the private owner’s forest rotation intervals decision and carbon credit generation in afforestation and reforestation projects. A credit verification mechanism with a harvest penalty implemented under the lCERs policy distorts the timber harvesting decision and the corresponding carbon credit supply. Two opposing incentives are created by the lCERs mechanism which leads to either longer or shorter rotations compared to the Faustmann rotation, depending on which incentive prevails. Our numerical results show that both lCERs and tCERs seem to have similar impacts on harvesting incentives, but the resulting carbon supply differs among the instruments owing to the credit verification mechanism. The tCERs carbon supply curve is monotonically increasing in the carbon price, while a lCERs carbon supply is non-monotonic and may have a backward bending region over a range of carbon prices

Long Term Versus Temporary Certified Emission Reductions in Forest Carbon-Sequestration Programs

Under the Clean Development Mechanism (CDM) of the Kyoto Protocol, forest projects can receive returns for carbon sequestration via two credit instruments: temporary (tCERs) or long-term certified emission reductions (lCERs). This article develops a theoretical model of optimal harvesting strategies that compares private optimal harvest decision under these two instruments. We find that risk neutral landowners are likely to prefer instituting lCERs over tCERs to maximize surplus. A particular type of early harvest penalty implemented under the lCERs is critical in determining the length of rotation intervals and the carbon credit supply. When this penalty is an increasing function of the difference in biomass before and after harvesting across verification periods, the landowner may choose longer or shorter rotation intervals compared to the Faustmann rotation. The resulting supply curve may have a backward bending region over a range of carbon prices