Net revenue of forest carbon offset projects: Application of the Korean emission trading system in the forestry sector

Abstract

Under the Korean Emission Trading System in The Forestry Sector (KETSF) initiative, the Korean government has developed several greenhouse gas (GHG) emissions reduction programs that include forestry activities as cornerstones of the initiative. Forest management is deemed to be a major strategy to implement KETSF; this has been confirmed by most participants in the program, who have shown their preference for forest management projects as the most effective and encouraging strategy to participate in the KETSF program. For a successful implementation of KETSF projects, it is essential to explore methods that optimize the positive impacts of such strategies, thereby maximizing the economic returns and carbon stocks that result from the implementation of forest management activities. Thus, this study investigated the economic returns of several KETSF projects in Korea, which included simulated scenarios under two main forest management strategies, one based on an extension of the rotation age, and a second one based on reforestation with new species. Five forest management scenarios were examined and evaluated in their ability to maximize carbon stocks and economic returns. Based on the results, two scenarios were identified as the best KETSF projects in terms of carbon stock increments. Additionally, the results indicated that projects including reforestation with new species added more economic value than projects that considered an extension of the rotation age. The study also revealed that KETSF projects generated revenue in both scenarios, by either extending the rotation age or by implementing reforestation with new species.