Payment for CO2 sequestration affects the Faustmann rotation period in Norway more than albedo payment does

Albedo and CO2 sequestration are the two most important climate forcing factors in forestry. After harvest the albedo in boreal forests increases which has a cooling effect. Likewise, CO2 captured in the photosynthesis reduce atmospheric CO2 and thereby have a cooling effect. These effects have value to society, and they may affect optimal management. This article investigates the effect on economical optimal forest management - here the optimal harvest age - by payment for these forcers. The albedo effect is evaluated using the standard climate metric global warming potential (GWP) with a time horizon of 100 years, i.e. in terms of CO2 equivalents. Alternative measures are discussed. The cooling effect of albedo change at time of harvest for the total Norwegian harvest corresponds to about 1.3% of the current Norwegian GHG emissions. The variation in albedo effect across the southern part of the country is modest. The CO2 sequestration effect is much larger than the albedo. At the time of harvest the CO2 content in forest is more than 40 times the albedo effect. The carbon effect will therefore dominate the effect on the harvest age. Payments for climate services will prolong the rotation period. With the current quota price in the EU ETS - about 80(sic) ton(-1) CO2 equivalents - and current stumpage value, carbon capture and storage will be more profitable than commercial timber production for young stands. For stands close to maturity, the payment scheme will have little effect.

Automated summary

Albedo and CO2 sequestration are the two most important climate forcing factors in forestry. They have significant impacts on the optimal forest management, particularly in terms of harvest age. The albedo effect is relatively small compared to the CO2 sequestration effect, which dominates the decision on harvest age. Furthermore, payments for climate services will extend the rotation period and be more profitable for young stands.