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Evaluating a tax-based subsidy approach for forest carbon sequestration

Published online by Cambridge University Press:  13 March 2017

SEONG-HOON CHO ,
JUHEE LEE ,
ROLAND K. ROBERTS ,
BURTON C. ENGLISH ,
EDWARD T. YU ,
TAEYOUNG KIM  and
PAUL R. ARMSWORTH
SEONG-HOON CHO*
Affiliation:
University of Tennessee – Agricultural and Resource Economics, 2621 Morgan Circle, Knoxville, Tennessee 37996, USA
JUHEE LEE
Affiliation:
University of Tennessee – Agricultural and Resource Economics, 2621 Morgan Circle, Knoxville, Tennessee 37996, USA
ROLAND K. ROBERTS
Affiliation:
University of Tennessee – Agricultural and Resource Economics, 2621 Morgan Circle, Knoxville, Tennessee 37996, USA
BURTON C. ENGLISH
Affiliation:
University of Tennessee – Agricultural and Resource Economics, 2621 Morgan Circle, Knoxville, Tennessee 37996, USA
EDWARD T. YU
Affiliation:
University of Tennessee – Agricultural and Resource Economics, 2621 Morgan Circle, Knoxville, Tennessee 37996, USA
TAEYOUNG KIM
Affiliation:
Gyeongsang National University – Food and Resource Economics, Jinju, Republic of Korea
PAUL R. ARMSWORTH
Affiliation:
University of Tennessee – Ecology and Evolutionary Biology, Knoxville, Tennessee, USA
*
*Correspondence: Professor Seong-Hoon Cho e-mail: scho9@utk.edu
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Summary

Forest carbon sequestration plays an important role in reducing the build-up of greenhouse gases that are known to contribute to global climate change. However, private landowners will supply less carbon sequestration than would be socially desirable if they are unable to capture the economic value of sequestration. We examine the viability of offering landowners property tax subsidies for forest carbon sequestration (referred to as a ‘tax-based subsidy approach’). Waiving property taxes on forestland provides incentives for landowners to afforest non-forested land and/or sustain forests that are at risk of deforestation. We focus on 17 Tennessee counties and one Kentucky county, constituting one of 179 Bureau of Economic Analysis areas in the United States, as a case study. Higher forestland net return from waiving property taxes increases the share of forestland in the 18 counties, which in turn increases the accumulation of carbon in the forest ecosystem, suggesting that this is a viable approach. The annualized county-level cost of supplying forest carbon sequestration using a tax-based subsidy ranges between US$15.56 and US$563.58 per carbon tonne across the 18 counties. Relevant government agencies can use these estimates to target selected counties for more cost-effective adoption of the county-level tax-based subsidy approach.

Keywords

forest carbon sequestrationincentive paymenttax-based subsidy
Type
Papers
Information
Environmental Conservation , Volume 44 , Issue 3 , September 2017 , pp. 234 - 243
Copyright
Copyright © Foundation for Environmental Conservation 2017 

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Footnotes

Supplementary material can be found online at https://doi.org/10.1017/S0376892917000078

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