Economics of multiple forest values and life cycle analysis

Abstract

As climate mitigation efforts transform the value of carbon with institutions creating incentives as well as regulating markets, avoiding unintended consequences becomes challenging. Life Cycle Inventory and Analysis (LCI/LCA) research tracks carbon and other services from the forest to products including displacement of fossil emissions when wood substitutes for fossil fuels or fossil intensive products. Incentives that do not target uses that displace the most emissions will likely steal the feedstock from less effective uses, increasing rather than decreasing emissions. We apply life cycle research to identify leverage points in reducing carbon emissions and their impact on old forest habitat as the ecosystem value most likely threatened by carbon mitigation incentives. Ethanol subsidies, forest carbon credits, and renewable energy standards steal the feedstock from higher leverage uses, while a carbon tax effectively penalizes the largest emitters. Either carbon taxes or incentives will affect the cost of sustaining critical habitat. Institutions need to consider life cycle implications to sustain forests and their multiple values. While a carbon tax provides the proper price signal with the highest reward for the greatest carbon emission reduction, increasing habitat values may be justified to support the production, maintenance and restoration of important habitat.