Progress 01/01/24 to 12/31/24
Outputs
Target Audience:Government agencies; conservation organizations; forest landowners; the general public Changes/Problems:Not relevant to this project. What opportunities for training and professional development has the project provided?Not intended to provide training and professional development opportunities; nothing to report How have the results been disseminated to communities of interest?We have presented the research results at the annual conference organized by the International Society of Forest Resource Economics. The manuscripts from this research have been submitted to professional journals for peer review. Mei, B., M. Ezekiel, C. Sun, and Y. Li. 2024. On the carbon additionality of working forests. Annual Conference of the International Society of Forest Resource Economics. April 1-3, 2024. Little Rock, AR. Sun, C., J.D. Kline, and X. Li. 2024. Adopting conservation easements on forestland: Evidence from the census of forest landowners in the United States. Annual Conference of the International Society of Forest Resource Economics. April 1-3, 2024. Little Rock, AR. Zhang, N. and B. Mei. 2024. The impact of COVID-19 and contract changes on the financial performance of lumber futures. International Society of Forest Resource Economics Symposium (Apr 1-3). Little Rock, AR. What do you plan to do during the next reporting period to accomplish the goals?Work on other objectives as stated in the project narrative.
Impacts
What was accomplished under these goals?
Forests can be actively managed to ensure a consistent supply of timber for products like lumber and paper. While the value of timber products is well understood in local and regional forest product markets, the value of forest-based ecosystem services--often treated as public goods--remains less developed. A key issue in forest carbon markets and research is additionality, which refers to the proven increase or avoided decrease in carbon sequestration resulting from a project enrolled in a carbon offset program. Previous studies on forest carbon have typically focused on either macro-regional or global scales, or on the micro-stand level. However, there is a gap in analyses at the intermediate scale--such as the landscape or forest level--that could more effectively account for carbon additionality in practical terms. This study seeks to fill that gap, improving transparency in voluntary carbon markets and helping mitigate the risk of greenwashing. This study analyzes the carbon additionality and economics of working forests at the 50-100 thousand hectare scale. Specifically, we examine the change in benefit and cost between a baseline scenario of timber management only and a scenario of rotation extension for both timber and carbon sequestration. Under the linear programming framework, we investigate the timber and carbon management strategies for multiple tree species in a working forest and explicitly measure the benefit and cost of carbon additionality using the discounted cash flow technique. Using a modeled 62,742-ha working forest in New Brunswick, Canada, this study examines the carbon additionality resulting from the extension of rotation for 5 or 10years. Results show that, at a carbon price of $8/tCO2e, the benefit of additional carbon sequestration from the working forest cannot offset its cost or the loss of timber income from deferred harvests. Compared with the 5-year rotation extension scenario, the 10-year rotation extension scenario sequestered more additional carbon. However, the higher total benefit of forest carbon came with the tradeoff of an even lower BCR. When rotations are properly extended, older trees can be harvested for sawlog sales for long-term carbon storage and replaced by vigorously growing seedlings, which can maximize the carbon sequestration potential of a working forest from the life-cycle perspective. Another aspect of carbon credits is the quality. The recent upswing in the size of the voluntary carbon market is mainly driven by the demand for high-quality carbon credits with a price premium. In the past few years, several initiatives on carbon credit quality have been launched, e.g. the Carbon Credit Quality Initiative and the Voluntary Carbon Markets Integrity Initiative, which aim to improve the quality of carbon credits and transparency. When the latest science and technology are incorporated into the carbon credit standards, we believe that the quality of forest carbon would keep ratcheting upward and the quality premium could induce more supply of forest carbon. Moreover, a preferential tax rate on forest carbon income would incentivize participation of working forests. Right now, carbon income is treated in the same way as ordinary income and is subject to higher federal tax rates and social security self-employment tax as incomes from other non-timber sources, e.g. hunting and fishing leases, fee activities and mineral rights. A lower tax rate on forest carbon income results in a higher after-tax net gain, all else being equal, which could help stimulate the supply of carbon credits from working forests. Future research should explore the value of capturing other co-benefits (e.g. water and biodiversity) from working forests in addition to carbon credits and the corresponding optimal forest operation strategies. In summary, this study demonstrates how to quantify the additionality of forest carbon in monetary terms at a more practical landscape or forest level. While the analysis focuses on New Brunswick, Canada, it can easily be extended to other regions worldwide by updating growth and yield data with well-established biometric models for locally dominant tree species. Key variables will need to be adjusted accordingly, such as the timber-to-carbon weight conversion factor and the carbon release factor at harvest. Intuitively, higher carbon density means more carbon is stored in the wood. However, greater carbon density does not necessarily result in a more economically efficient additionality, as measured by the benefit-cost ratio (BCR), for the same extended rotation length. Conversely, a higher carbon release at harvest typically leads to a longer rotation period in order to delay the penalty from carbon being released back into the atmosphere. This relationship is analogous to the effect of regeneration costs on rotation length in the Faustmann model.
Publications
- Type:
Peer Reviewed Journal Articles
Status:
Awaiting Publication
Year Published:
2025
Citation:
Mei, B., M. Ezekiel, C. Sun, and Y. Li. 2025. On the carbon additionality of working forests. Forestry Economics Review. In press. https://doi.org/10.1108/FER-07-2024-0008.
- Type:
Peer Reviewed Journal Articles
Status:
Awaiting Publication
Year Published:
2025
Citation:
Zhang, N. and B. Mei. 2025. Impacts of COVID-19 and contract changes on the financial performance of lumber futures. Canadian Journal of Forest Research 55(1): In press. https://doi.org/10.1139/cjfr-2024-0177.
- Type:
Other Journal Articles
Status:
Under Review
Year Published:
2025
Citation:
Sun, C., J. Kline, and X. Li. Under review. Conservation easement adoption among forest landowners in the United States. Land Use Policy.
- Type:
Books
Status:
Under Review
Year Published:
2025
Citation:
Li, Y. Under review. Book chapter: Tax considerations of conservation easements. Forest landowners' guide to the federal income tax.
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Progress 01/01/23 to 12/31/23
Outputs
Target Audience:Government agencies; conservation organizations; forest landowners; the general public Changes/Problems:Not relevant to this project. What opportunities for training and professional development has the project provided?Not intended to provide training and professional development opportunities; nothing to report How have the results been disseminated to communities of interest?We have presented the research results at the annual conference organized by the International Society of Forest Resource Economics. The manuscripts from this research have been submitted to professional journals for peer review. Sun, C., B. Mei, and Y. Li. 2023. Optimal contract arrangements for forest carbon. Oral presentation at the International Society of Forest Resource Economics Symposium (May 15-17). Houston, TX. Mei, B. 2023. Carbon additionality. Oral presentation at the International Society of Forest Resource Economics Symposium (May 15-17). Houston, TX. Li, Y. 2023. News release: Researchers question benefits of 'perpetual' forest conservation easements. https://warnell.uga.edu/news/stories/2022/researchers-question-benefits-perpetual-forest-conservation-easements. What do you plan to do during the next reporting period to accomplish the goals?Work on other objectives as stated in the project narrative.
Impacts
What was accomplished under these goals?
With the expansion of wildland-urban interfaces, forestland conservation has become an increasingly important land-use and forest policy issue in recent decades, with conservation easements emerging as a major land-use mechanism to protect forestland from housing and other forms of development. Our study of conservation easement adoption among private forestland landowners in the US suggests that there can be considerable spatial dependence in easement adoption and correlation with landownership objectives, forestland parcel characteristics, and conservation demand. Findings from our analysis suggest several policy implications pertaining to the use of conservation easements in forestland conservation efforts. Overall, 8.5% of forest landowners in the National Woodland Owner Survey adopted conservation easements in the United States as of 2017-2018, with differences being present among the regions (i.e., 9.5% in the North, 8.0% in the South, and 7.5% in the West). Although these statistics indicate that conservation easements appear to be reasonably well accepted and prevalent among private forestland owners, data from the National Conservation Easement Database indicate that conservation easements on private forestland represent just 1.6% of the total land base in the US as of 2023 (NCED, 2023). While the above two data sources are not strictly comparable, conservation easements seem to have become a widely adopted conservation tool with substantial promise for future conservation efforts. Our spatial statistical modeling suggests a robust spatial dependence in easement adoption among private forest landowners, implying that the likelihood of one landowner adopting a conservation easement is greater if that landowner has a neighbor who has adopted an easement. Combining the spatial effects finding with those for individual covariates suggests additional policy implications. First, our results regarding the influence of objectives in forest landownership indicate that conservation easement adoption is more likely among those landowners possessing wildlife habitats and concern for heirs-type objectives, while those landowners with more timber or investment objectives are less likely inclined to adopt easements. Second, our results indicate that landowner knowledge about conservation easements is crucial in their adoption of easements. Thus, conservation efforts might best turn to additional education and outreach through extension services, workshops, and the like to inform landowners about the role that conservation easements can play in the overall conservation efforts, as well as what conservation easements might mean for individual landowners were they to adopt an easement. Third, our findings demonstrate the influence of public demand for conservation in motivating conservation efforts. States and regions experiencing higher population growth, and thus scarcity of undeveloped forestland, tend to experience increasing demand for land conservation. Finally, the duration of state conservation laws has shown their relevancy to overall easement adoption rates. States that have adopted statutory laws enabling the use of conservation easements earlier tend to have higher easement adoption on forestland. Forestlands provide significant timber and ecosystem benefits to society, including wildlife habitats, clean water and air, and carbon storage. With continuing growth in population and income, the demand for conservation likely will continue to grow in the US. Given that there are about 9.6 million family forest landowners in the US, each holding less than 100 acres (Bulter et al., 2021), it is apparent that the behavior and decisions of individual forest landowners are critical to conservation efforts. Therefore, there will be a constant need to monitor the progress of conservation easement adoption in the US while providing helpful and timely information and assistance to private forest landowners to meet the future conservation challenges associated with shifting forest landscapes.
Publications
- Type:
Journal Articles
Status:
Published
Year Published:
2023
Citation:
Zhang, N., Y. Li, and B. Mei. 2023. A review of the financial performance of lumber futures and some prospects. Forest Policy and Economics 157: 103095.
- Type:
Journal Articles
Status:
Under Review
Year Published:
2024
Citation:
Sun, C., J. Kline, and X. Li. Under review. Conservation easement adoption among forest landowners in the United States. Land Use Policy.
- Type:
Journal Articles
Status:
Under Review
Year Published:
2024
Citation:
Mei, B., M. Ezekiel, C. Sun, and Y. Li. Under review. On the carbon additionality of working forests. Forest Policy and Economics.
- Type:
Book Chapters
Status:
Under Review
Year Published:
2024
Citation:
Li, Y. Under review. Book chapter: Tax considerations of conservation easements. Forest landowners' guide to the federal income tax.
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Progress 01/01/22 to 12/31/22
Outputs
Target Audience:Government agencies; conservation organizations; forest landowners; the general public Changes/Problems:Not relevant to this project. What opportunities for training and professional development has the project provided?Not intended to provide training and professional development opportunities; nothing to report How have the results been disseminated to communities of interest?We have presented the research results at the annual conference organized by the International Society of Forest Resource Economics. The manuscript from this research was submitted to the journal of Natural Resource Modeling for peer review and published in 2022. What do you plan to do during the next reporting period to accomplish the goals?Work on other objectives as stated in the project narrative.
Impacts
What was accomplished under these goals?
Environmental protection has become imperative in recent decades, with the continued population growth and environmental degradation in many regions. Global climate changes and consequential extreme weather events are a prominent example. As one type of natural resource, forestland has been not only managed for fiber production but also increasingly contracted for the provision of environmental goods or services. In this study, a theoretical model is constructed to examine the optimal contract arrangement for working forests, given that a landowner is willing to encumber a portion of the property rights for conservation. In distributing the available budget among applicants, the agency maximizes the total carbon benefit from all enrolled land. The benefit is represented by the value of carbon sequestered over the contract duration. The model is simulated with empirical data from the southern United States. A bilateral contract for conservation defines the exchange of two promises between two parties: a payment versus the provision of conservation benefits. The outcomes from this study affirm several critical principles of contract law in financing the conservation of working forests. First, a landowner will require a higher payment if more property rights (e.g., a longer contract length) are encumbered in a conservation contract. Second, landowners whose land can generate more carbon benefits will require a more favorable contract arrangement, in the form of either a shorter contract length, a higher payment, or both. These landowners may have a piece of land with better site quality or have planted more trees on the land. Similarly, a market with a higher timber price presents more favorable land management options to landowners, so it has the same impact on contract arrangements. Finally, under a budget constraint, the government agency tends to have a shallower or thinner relationship with more landowners, i.e., encumbering a smaller portion of property rights from more landowners. Thus, more carbon benefits can be generated from more landowners enrolled with a shorter contract and a smaller payment. That is all because carbon sequestration is assumed to follow a logistic curve, with rapid growth for young forests. This tendency supports the use of conservation contracts with a shorter term and a higher enrollment share in a forest community. Our society will likely undergo more pressure for conservation as population and income continue to grow. Thus, how to utilize forestland for the production of both timber and environmental goods will be a central research area in the long term. A conservation contract or payments for ecosystem services on private forestland allow government agencies to use limited public financial resources to maximize conservation benefits. Future studies will need to have more detailed analyses on various contract constraints or settings (e.g., a menu of contracts, payment options, or exit options), and additionally, the impact of parameter uncertainties (e.g., volatility of timber or carbon price).
Publications
- Type:
Journal Articles
Status:
Published
Year Published:
2022
Citation:
Sun, C., B. Mei, and Y. Li. 2022. Optimal contract arrangements for conservation on working forests. Natural Resource Modeling 35(4):e12351.
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