On the optimal regulation of land use sector climate impacts

Human land use affects the climate through various channels. This thesis focuses on the optimal (i.e. welfare-maximizing) regulation of land use sector climate impacts using market-based instruments, such as taxes and subsidies. The thesis consists of four articles and a summary chapter. Each article focuses on a separate aspect of land use sector climate policy. The first article outlines a comprehensive tax policy for jointly regulating carbon storage in biomass, soils and products. Considerations regarding soil carbon storage are emphasized. The second article concerns the regulation of CO2 emissions from the energy use of logging residues. The harmfulness of these emissions is compared with that of fossil emissions. A way to harmonize the carbon taxation of the both energy sources is presented. The third article regards the application of the additionality principle to forest carbon subsidies. In the stand-level context it appears that the additionality principle can be implemented without distorting the optimal rotation, by reclaiming subsidies for baseline carbon storage by a site productivity tax on forests. However, at the market-level such a tax distorts the optimal rotation and the optimal land allocation. These distortions can be avoided, if the excess subsidies are eliminated by general land taxation (which also targets other land use). The fourth article presents a new concept: the Social Cost of Forcing (SCF), which is the social cost of the marginal unit of radiative forcing at a given moment. It is a fundamental price that can be used to value different forcing agents. Forcing agents’ prices that are based on the SCF are consistent with the Social Cost of Carbon, and can therefore be consistently applied in cost-benefit analysis or utilized to harmonize the regulation of non-CO2 forcing agents. Together the four articles contribute to our understanding of land use sector climate policy design.Maankäyttö vaikuttaa ilmastoon monella tapaa, mutta nykyinen ilmastopolitiikka ei ohjaa maankäyttöä kattavasti ja johdonmukaisesti. Päästökauppa ja hiiliverot kannustavat päästövähennyksiin teollisuudessa ja energiantuotannossa. Vastaavaa ilmastovaikutusten hinnoitteluun perustuvaa kattavaa ohjausta ei ole toistaiseksi ulotettu maankäyttösektorille. Ilmastopolitiikkaa voidaan tehostaa tuomalla maankäyttö ohjauksen piiriin. Väitöskirjassani tarkastelen maankäyttösektorin ilmastopoliittista ohjausta. Pääpaino on metsien hiilivirtojen ohjauksella, mutta kokonaiskuvan luomiseksi tutkimuksissa sivutaan muitakin maankäyttösektorin ilmastovaikutuksia. Esitetyt ohjauskeinot ovat veroja ja tukia, joiden avulla ilmastovaikutuksille luodaan hinta. Kunkin ilmastoa lämmittävän tekijän (kuten päästetyn hiilidioksiditonnin) hinta perustuu sen tuottaman yhteiskunnallisen haitan arvoon. Ilmastovaikutusten järjestelmällinen hinnoittelu luo kannustimet niiden huomioimiseen yksityisissä maankäyttöpäätöksissä ja kulutusvalinnoissa. Väitöskirja koostuu neljästä osajulkaisusta. Ensimmäisessä osajulkaisussa esitetään eräs tapa muotoilla kattava maankäyttösektorin ilmasto-ohjaus siten, että useimmat tuet ja verot kohdistetaan helposti suoraan havaittaviin toimenpiteisiin (kuten pellonraivaus tai puunkäyttö) vaikeammin havaittavien reaaliaikaisten hiilivirtojen sijaan. Toinen osajulkaisu koskee hakkuutähteiden energiakäytön ohjausta. Tutkimuksessa hakkuutähteiden poltosta aiheutuvien hiilidioksidipäästöjen haittoja verrataan fossiilisten polttoaineiden käytöstä aiheutuviin vastaaviin haittoihin ja esitetään keino näiden energianlähteiden hiilidioksidiverotuksen yhdenmukaistamiseksi. Kolmannessa osajulkaisussa tarkastellaan lisäisyysperiaatteen soveltamista metsien hiilitukiin. Hiilivirtojen johdonmukainen hinnoittelu tarkoittaa metsien hiilen varastoinnin tukemista, mutta kaikesta varastoinnista maksaminen voi olla kallista. Tutkimuksessa tarkastellaan, kuinka optimaalinen ilmasto-ohjaus voitaisiin toteuttaa tukemalla vain lisäistä (eli ilman tukia saavutettavan tason ylittävää) hiilen varastointia. Neljännessä osajulkaisussa esitellään menetelmä, jonka avulla ilmastovaikutusten arvottaminen voidaan ulottaa muihinkin lämmittäviin tekijöihin hiilidioksidin ohella. Kaikki neljä osajulkaisua tukevat maankäyttösektorin ilmastopolitiikan suunnittelua

Metsät ja hiilivirtoja ohjaava ilmastopolitiikka

201

Biopaths to Carbon Neutrality

Central EU-level documents concerning the bioeconomy were reviewed, focusing on carbon and climate issues. The bioeconomy is connected to most UN Sustainable Development Goals, and tied to several EU policy sectors and priorities, incl. climate and energy, biodiversity, circular economy, agriculture, forestry, industrial policy, regional policy, and research and innovation. Their interlinkages with the bioeconomy have not been taken sufficiently into account in current EU policy. Work is needed on building the coherence and addressing sustainability. A wider group of actors is needed to fulfil the potential of the bioeconomy, including consumers, cities, regions, the educational and research sectors, service providers, and small-scale biomass producers, as the bioeconomy is not only about large-scale industry. Circular economy and the bioeconomy need to be developed in tandem. Standards, sustainability criteria and other types of regulation will increasingly be needed. The situation is also constantly evolving, as new issues and topics emerge. New sectors, e.g., construction, should also be included, as well as services and ecosystem services. The bioeconomy can offer solutions to the carbon issue in three ways. First, the biomass-producing sectors can upkeep and increase carbon sinks. Post-2020 CAP and climate-smart forestry may emphasise this function. Second, bio-based products having a long lifetime, such as wooden buildings, may constitute carbon sinks. The cascade principle, waste prevention and sector specific regulations are relevant. Third, bio-based products may substitute non-renewable products, e.g., in chemical industry, packaging, and energy. Public procurement, product standards and sectoral policies may be harnessed to increase their markets. It must be ensured that the bio-based products have (significantly) lower GHG emissions over their life-cycle. It is also vital that the use of bio-based products implements substitution rather than additional production and consumption. There are tradeoffs between the ways in which the bioeconomy can contribute to the climate challenge. Competing uses for biomass as well as the competition between sinks and harvests are inbuilt risks in the bioeconomy. The focus in the bioeconomy discussion is on production, economic growth and employment. Critical views about consumption and material growth are largely absent. All currently used fossil and other non-renewable resources cannot be replaced with biomass. Circularity, waste prevention and energy efficiency should be emphasised, and discussion on sustainable lifestyles should be more prominen

A National and International Analysis of Changing Forest Density

Peer reviewe

On the challenges of designing cooperative coalition games for multi-species fisheries

Only abstract. Paper copies of master’s theses are listed in the Helka database (http://www.helsinki.fi/helka). Electronic copies of master’s theses are either available as open access or only on thesis terminals in the Helsinki University Library.Vain tiivistelmä. Sidottujen gradujen saatavuuden voit tarkistaa Helka-tietokannasta (http://www.helsinki.fi/helka). Digitaaliset gradut voivat olla luettavissa avoimesti verkossa tai rajoitetusti kirjaston opinnäytekioskeilla.Endast sammandrag. Inbundna avhandlingar kan sökas i Helka-databasen (http://www.helsinki.fi/helka). Elektroniska kopior av avhandlingar finns antingen öppet på nätet eller endast tillgängliga i bibliotekets avhandlingsterminaler.Most real-world high-seas fisheries harbor more than one commercially valuable species of fish that may, or may not, be biologically interdependent. The access to the fish stocks in high-seas fisheries is open to everyone. Hence, these fisheries attract multiple coalitions to harvest the common fish stocks. Over the past century, this has led to the overexploitation of the stocks of several important marine species. As a result, the stocks have declined and profitability of fishing has decreased. This has aroused discussion on the benefits of cooperation between fishing nations and the challenges of designing multilaterally satisfying treaties. The overfishing problem has also attracted the attention of economists, who have studied the economically optimal exploitation of fisheries with single and multiple species, as well as the stability of coalition structures between fishing nations. However, a successful theoretical merger between multi-species models and cooperative coalition games has not yet been witnessed. Cooperative game models of fisheries usually focus on a limited number of coalitions exploiting a single stock, while multi-species models are predominantly confined to a monopoly setting. In this study, we pursue the possibility combining these two approaches into a single modeling framework that could be used to study the survival of biologically interdependent species under different coalition structures and the stability of coalition structures in multi-species fisheries. First we review economic literature on fisheries to establish the necessary building blocks of such a model. Next, we discuss the desirable characteristics of cooperative game models for multi-species fisheries, and propose that such models should be discrete-time games. Furthermore, we argue, that as the biological and economic settings in real-world fisheries differ, a single theoretical model cannot be used to provide general intuitive answers to the questions about a the survival of species and the stability of coalition structures. Instead, a general theoretical framework should be developed, and adjusted to each fishery separately. Unlike in the traditional fisheries models, when more than one coalition selectively harvest multiple species of biologically interdependent fish, unambiguous pure-strategy Nash equilibrium solutions seldom exist. Hence, in this setting, fishing coalitions cannot set there harvesting policy as a best response to their rivals actions. As a solution to this problem, we propose that coalitions set their harvesting policies based on expectations instead of perfect information about their rivals actions

On the optimal regulation of land use sector climate impacts

2019Diss. : University of Helsinki, 201

Social cost of forcing: A basis for pricing all forcing agents

201

On physical and social-cost-based CO2 equivalents for transient albedo-induced forcing

202

Economics of forest carbon storage and the additionality principle

The ability of forests to store carbon is vital in maintaining the preset climate conditions, but is not systematically included in forest management or land-use decisions. Economic reasoning suggests subsidizing carbon storage, but empirical models show that this may easily more than double stand-level bare land values. Subsidization may thus be expensive, as it requires paying for all storage, including what would otherwise be obtained for free. To limit the consumption of public funds, the regulator may apply an additionality principle and solely subsidize storage exceeding a baseline level. We show that the commonly applied stand-level analysis suggests that the additionality principle could be applied to optimal rotation decisions without distortions. However, applying a forest vintage model with endogenous prices and land allocation decisions shows that similar application of the additionality principle causes distortions to both land allocation and optimal forest rotation. Nevertheless, subsidizing carbon storage by forest site productivity tax may still be preferable among the second-best policies. The distortions can be avoided by eliminating excessive subsidies by general land taxation irrespective of whether the land is used for forestry or agriculture.201