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Different outcomes of alternative approaches to forest carbon accounting at the local level


In forest carbon accounting and policy assessment at the micro level, inconsistencies, and even confusion, abound regarding how timber and carbon are treated as joint products, whether the Paris Agreement principles of additionality and permanence are followed, and if the differentiated composition and duration of harvested wood products (HWPs) are captured. Here, we tackle these issues with two widely used alternative analytic frameworks. The first features a Hartman modification of the Faustmann model for forest growth and harvest without incorporating accounting principles and HWPs, whereas the second builds from a profit function of forest production incorporating accounting principles and measures of HWPs. Using the intensively managed pine plantations of the U.S. South as an empirical case, we show that the carbon outcomes of the two approaches vary greatly. The Hartman-Faustmann approach exaggerates carbon credits for a landowner by a factor of at least 2.76. Furthermore, while adding carbon to the valuation has limited impact on the optimal harvest age, it increases net revenue under the profit function approach by 45% at a price of $20 per ton of CO2. These distinctions are of broad importance as policymakers and forest economists in all regions of the world look for appropriately integrated assessments of forest sector solutions to climate change.

1. Introduction

It is generally accepted that if protected and managed adequately, forests can play a significant role in reducing the emission of CO2 and removing it from the atmosphere, and do so in a cost-effective way [13]. Thus, nature-based solutions (NbSs) by the forest sector are widely recognized as an important pathway for mitigating climate change [4,5]. But advancing along this pathway calls for major research efforts to be devoted to forest carbon accounting and policy assessment, which can be conducted at different levels of aggregation–from local and regional to national and international [6,7]. This study is motivated to conduct a carbon accounting and thus offset credit determination at the local or micro level. Unlike studies at national or even higher aggregate level [e.g., 8,9], this kind of micro-level work is directly relevant to the participation of individual forestland owners in NbSs.

Studying forest sector carbon sequestration and storage (S1 & S2) at the micro level has attracted attention from many scholars, including economic and policy analysts [e.g., 10–12]. Substantive research progress notwithstanding, there remain deficiencies over how to incorporate S1 & S2 into carbon accounting and policy assessment properly [13]. As elaborated below, one of the deficiencies is reflected in the frequently used Hartman modification to the Faustmann model for determining the optimal rotation age and land expectation value of a timber stand [10], which is not well-suited for dealing with a continuous process underlying forest carbon accounting or policy assessment [14]. Predicated on the adoption of such a discrete model, existing studies have largely failed to conform to the accounting principles of the Paris Agreement (PA), treat timber and carbon as joint products appropriately, and capture the differentiated potentials of carbon storage by harvested wood products (HWPs).

Therefore, it is imperative to establish a more satisfactory analytic framework of forest carbon accounting and explore the outcomes of alternative approaches and their likely deviations. To that end, our work is built on a forest-level profit function that treats timber and carbon as joint products coherently, and captures the PA accounting principles and the differentiated potentials of carbon storage in HWPs. It is expected that in combination, these steps will contribute to an improved handling of forest sector NbSs and thus an enhanced understanding of their implications to forest management and wood utilization. Using an intensively managed pine plantation in the U.S. South, our empirical case demonstrates that the outcomes indeed deviate a lot, with those derived from the Hartman-Faustmannn approach exaggerating the amount of carbon offset credits a landowner can take by a factor of at least 2.76. Also, while adding carbon to the valuation has limited impact on extending the optimal rotation age, its effect on raising the net revenue can be substantial. We believe that these findings are of broad interest, given the great need and strong desire for individual landowners to participate in forest sector climate actions in all parts of the world [4,15].

The rest of this paper is organized as follows. First, we examine the deficiencies of the literature as well as the concrete ways to move the research agenda forward. Then, we consider the conceptual issues revolving around forest carbon accounting and joint production. Next, using a pine plantation example of the U.S. South, we show the implications of the requisite accounting principles when timber and carbon are treated as joint products. Finally, we summarize our analysis and discuss our findings.

2. Literature review

In most local-level economic and financial studies, carbon sequestered by trees has been treated as another output of the joint forest production, which is a process that results in more than one output using a common input, or common inputs [16]. When dealing with timber alone, the familiar Faustmann model–a discounted net benefit formulation for a stand of trees over an infinite time horizon–is often used to determine the optimal rotation age and land expectation value. Accordingly, in studying joint forest production, a modification to the Faustmann model is made by adding another term for the net non-timber benefit (carbon in this case). Since this kind of modification was originally introduced by Hartman [17], it is called the Hartman modification [10,18].

Compared to the timber-only scenario, incorporating both timber and carbon into the valuation affects a landowner’s management outcome and decision-making. For instance, Ekholm [11] shows that when starting from bare land, the initial carbon price and its growth rate both increase the length of the first rotation. Hou et al. [19] claim that the optimal rotation age increases for all examined species, when considering the joint production of timber and carbon. By distinguishing “temporary” Certified Emission Reductions (tCER covering 20 years) and “long-term” Certified Emission Reductions (lCER covering 30 years) under the Kyoto Protocol, the authors also find that accounting regimes can have a large impact on the net economic benefit.

Further, earlier studies have recognized the importance of such carbon pools as HWPs and dead organic matter (DOM) on the forest floor, in addition to standing trees. After presenting a conceptual framework for integrating multiple carbon pools, Asante and Armstrong [20] demonstrate that incorporating DOM and HWP have the effect of reducing the rotation age. Perhaps more interestingly, when initial stocks of carbon in these pools are relatively high, considering them can have a highly negative effect on net present value. On the other hand, Holtsmark et al. [21] discover that Asante and Armstrong [20] overlooked carbon released from decomposition of DOM and HWPs following the harvest. When this has been corrected, the sizes of the initial stocks of DOM and HWPs do not influence the optimal rotation age. Moreover, that study suggests that including DOM leads to longer, not shorter, rotation periods.

Notably, Gutrich and Howarth [22] and van Kooten [12] are among few studies that were able to take into account the life cycle of carbon through the vertical chain of wood processing. The former finds that accounting for the value of carbon sequestration favors longer (in some cases much longer) optimal rotation periods and/or the adoption of partial harvesting regimes. The latter exhibits how to decide which forestry activities generate carbon offset credits, with a stress over the centrality of the “rules of the carbon game” to determining the amount of offset credits; nevertheless, it did not explicitly consider the PA’s accounting requirements itself. As interesting and insightful as these studies may be, they closely followed the modeling strategy of van Kooten et al. [10] in exploring the outcomes of alternative scenarios of forest management and wood products manufacturing, based on a Hartman modification to the Faustmann model. Also, certain parameters used, including the wood decay rate and the portion of timber entering the product pool, are at odds with the IPCC rules. Indeed, when defining the scope of forest sector mitigation actions and enumerating their magnitudes, what van Kooten [12] referred to was the dated IPCC 2000 rules, instead of the more comprehensive 2006 Guidelines for National Greenhouse Gas Inventories. Because of its much earlier publication, of course, it was impossible for Gutrich and Howarth [22] to heed to the IPCC 2006 guidelines or the PA carbon accounting principles, particularly additionality and permanence as noted below. In the end, their numerical examples look more like a regional-level assessment of forest sector potential of S1 & S2, rather than a local-level accounting that we are concerned about.

In any event, a Hartman modification to the Faustmann model may not be a very effective framework for forest carbon accounting or policy assessment because of its intrinsic limitations. The most salient limitation is that as a stand-level formulation, the Faustmann model features a discrete, point-input and point-output production process that is not able to explicitly represent the forest-level, continuous production process [14,23]. The latter is, however, more compatible with the requirements of carbon accounting and the jurisdictional governance of climate change mitigation under the PA [13].

More specifically, the PA requires that carbon sequestered in forest ecosystems (FESs) and stored in HWPs be additional and permanent as measured against an established baseline [15,24]. The baseline emission or removal level is usually defined by a country in its NDC (nationally determined contributions) and applied to various entities under its jurisdiction [13]. Additionality means that the carbon to be accounted for is an additional sequestration or storage above and beyond the baseline level; permanence implies that the amount of carbon, once accounted for, will be sustained for a sufficiently long period of time. If additionality or permanence cannot be ensured, it is invalid to take full credit for emission offsets from estimated carbon stock increase. Consequently, it is inappropriate to assume financial rewards from the calculated gains of carbon stock and storage at the market price (in CO2 equivalent) of traded emission allowances [25]. Thus, a proper starting point for carbon accounting and policy assessment is to work at the forest level, if not a more aggregate one [14].

In addition, the concept of joint production in forestry itself has not been carefully scrutinized [26]. Unlike the cases of timber vs. water or timber vs. non-timber forest product (NTFP), timber and carbon are both biomass-based and thus inseparable. As a result, once harvested, the fate of timber dictates that of carbon, given that the timber may be destined for sawnwood, wood-based panels, and/or paper and paperboard. Because the potential of harvested timber producing these outputs is primarily determined by the (mean) diameter of trees, which is in turn a function of their (mean) age, the proportion of different products varies with time, all else being equal. These factors will ultimately influence the quantity and life of carbon contained in HWPs [7].

In short, it is essential to incorporate forest carbon S1 & S2 properly into a local accounting or assessment. For that purpose, we must: (1) make the analytic framework more compatible with the basic accounting principles of the PA; (2) treat timber and carbon appropriately as joint forest products; and (3) give sufficient attention to the varied potentials of carbon storage in different HWPs. We argue that these steps pertain to the credibility of any research attempt and its findings, and that time has come for us to build them into a harmonized, comprehensive analytic framework.

3. Conceptual considerations

3.1 Accounting requirements

A forest sector NbS can be accounted for only when it represents a reduction or removal of anthropogenic emissions relative to an established baseline [6]. Therefore, a key first step is to define a Party’s baseline, against which the additionality of its concrete actions in the forest sector can be determined. In a net–net accounting, total net emissions or removals in the base year are subtracted from total net emissions or removals in the accounting period to find the total amount of credits or debits resulting from these actions [13].

Any forest sector mitigation action may lead to non-permanence if it is not well designed. This is mainly because forest sector actions inevitably entail long-term land use, management commitment, and/or attempting to make the HWPs last as long as possible. As already stated, the duration of an action should be commensurate with the life of an NDC; certainly, it must be longer and more coherent than what was practiced under the Kyoto Protocol notions of tCER and lCER [15]. Given the current consensus for realizing global carbon neutrality by mid-century [27], forest sector S1 & S2 must last at least until then. In fact, the mainstream convention is to consider the effectiveness of any major action until the end of this century [1,5]. To ensure performance, the specific effects of capturing various carbon pools and their corresponding durations on the accounting and management outcomes must be carefully measured and monitored.

3.2 Aggregate process

Any sensible attempt of forest carbon accounting or policy assessment must look beyond a single stand by examining a more aggregate, forest-level production process, which is possibly the smallest unit of compatible with the jurisdictional governance approach [13]. This is not because the stand-level Faustmann model is wrong per se; rather, it is because the forest-level, aggregate unit is more congruent with the nature of forest sector mitigation actions and the corresponding requirements for any NbS, namely additionality and permanence measured against a baseline.

At the stand level, harvesting and regeneration decisions are made intermittently, and the regeneration decision depends on the harvest decision, which is why the Faustmann model is considered a point-input and point-output model [28]. At the forest level, on the other hand, harvesting, regeneration, and management decisions must be made simultaneously and continuously in order to sustain timber production and/or carbon sequestration. Also, we know that the Faustmann model does not allow an explicit consideration of simultaneous shifts at both the extensive and intensive margins of forest production [18,28]. As a result, Wang et al. [13] have called for “reorienting the inquiry into forest C (carbon) policy and economics from the predominantly disaggregated, project-based paradigm to a more aggregated, program-oriented one, such that it will be more congruent with and conducive to the NDC structure and the jurisdictional approach”.

It should be reiterated that while a forest-level production process is perhaps the smallest unit of carbon accounting compatible with the NDC-centered architecture of the PA, it is not the only one. Regional, national, and international assessments of the forest sector’s potential for carbon emission reduction and removal have been carried out [e.g., 8,9,29]. But our study takes a local-level perspective, which we argue is more foundational not only for carbon accounting but also for offsetting and credit taking.

3.3 Joint production

In cases of joint production like timber vs. non-timber products or timber vs. water, the products, albeit closely related, are separate [16]. That is, timber, water, and an NTFP can exist independently [30]. In contrast, in the case of timber vs. carbon, carbon is embodied in timber and thus the product(s) derived from it [7,10]. However, different HWPs have different life spans, causing the carbon stored in them to be released at different rates–a critical consideration for the permanence condition of emission offsetting and credit taking.

IPCC [7] has made it clear that timber harvesting is partitioned into “roundwood” (or “wood-removals”) and “slash” (generally left in the forest). Roundwood is then further subdivided into “industrial roundwood” and fuelwood or charcoal. “Industrial roundwood” can in turn be used to manufacture a combination of the three wood product commodity classes: sawnwood, wood-based panels, and paper/paperboard. Accordingly, the default half-lives of the three semi-finished HWP classes are: 35 years for sawnwood, 25 years for wood-based panels, and 2 years for paper and paperboard. It is thus crucial to consider the life cycles of different HWPs when we scrutinize the content and duration of carbon embodied in them.

4. An illustrative case

Here, we illustrate the conceptual advances we have articulated using a case of southern pine management in the U.S. First, we present our model, a profit function of joint forest production. Next, we list the data sources and characterize the forest used for the case study. Following these steps, we report our findings in section 5.

4.1 Analytic framework

Let us begin by considering timber as the only output of forest production. Given that input and output decisions in the production process change in response to evolving market conditions, we can express the profit maximization as: where a timber producer incurs an initial investment expense at t = 0 in establishing its forest inventory I(0); thereafter, facing a market price Pt for timber, a unit regeneration cost wt, a land rental cost lt, and a discount rate it, she produces a flow of outputs Q(t) in the future as additional annual operating inputs K(t) and a land acreage equal to L(t) are committed, and an inventory level of I(t) is maintained. This analytic framework captures the fundamental long-run, continuous nature of forest production, which can be viewed as a process that employs operating inputs and land, along with the existing inventory, to achieve a new level of inventory that is then used to produce a certain amount of stumpage [14].

When both timber and carbon are treated as outputs, the above model must be modified. First, the total revenue is now a sum of timber revenue P1tQ1(t) and carbon revenue P2tQ2(t), where P1t and P2t, and Q1(t) and Q2(t) are, the prices and quantities of the two classes of outputs, respectively. Furthermore, we need to modify the opportunity cost associated with holding an inventory of I(t), which we will do in our numerical scenarios. Note that this opportunity cost should be weighted by the prices of the two classes of outputs corresponding to their statuses and dynamics. Given the need for urgent actions to alleviate climate change, an argument can be made to put a time value on carbon sequestered in FES and stored in HWPs [12,31]. But we feel that it is more complicated than that, considering the fact that estimating the social cost of carbon (SCC) should take into account the time value of emission reduction as well as removal [32]. That is, the SCC is supposed to capture the value of delayed emission or accelerated sequestration through properly discounting the accumulative monetary damages–earlier and more significant actions leading to a lower SCC. As shown below, also, the rotation age of a pine plantation is relatively short anyway; thus, the added time value may not have a sizable impact on landowner’s decision making.

4.2 Data sources

The forest production process and its associated input use and output generation of our case study is based on a scenario explored by Yin et al. [33]–the only dataset we possess. The advantage of the dataset is that it has all the relevant information on both the growth and yield under alternative regimes of silvicultural practices and the corresponding inputs used and outputs generated over time, as well as statistics for input costs and output prices. The growth-and-yield data originated from a long-term experimental study conducted by the University of Georgia Plantation Management Research Cooperative, installed in 1979 on cutover land after the existing slash pine plantations had been harvested. The Cooperative replicated silvicultural treatments at 16 locations along the lower coastal region of Georgia and northern Florida [34]. Each treatment plot covered 1/2 acre with the interior 1/5-acre plot being measured.

The average site index was estimated at 60 feet, and the planting density was 600 trees/acre. Each site was prepared with the standard treatment for machine planting (S), consisting of a single pass with a rolling-drum chopper after harvesting, followed by a broadcast burn before planting. Then, combinations of the following three treatments were adopted: bedding (B)–double-pass with bedding plow before planting; fertilization (F)–application of 250 lb./acre of ammonium phosphate after the 1st growing season, followed with 150 lb./acre of nitrogen, 50 lb./acre of phosphorus, 100 lb./acre of potassium broadcast after year 12; and herbicide use (H)–treatment to control competing vegetation after standard chopping and burning.

4.3 Forest characterization

Here, we focus only on the “S+B+H” regime–standard machine planting plus bedding and herbicide use, with its growth process and productivity summarized in Table 1. The price and cost parameters are listed in Table 2. There exist local markets for both sawtimber and pulpwood, and these products are sold at different prices. Meanwhile, the growth/yield models used determine the amounts of these products for a stand of trees at a given point of time, and thus show their changes over time. For analytic convenience, a regulated forest is also assumed in dealing with the flow and stock variables of carbon accounting; thus, we have stands of equal sizes but different ages distributed over space.

Table 1. Estimated growth and yield for the standard plus bedding and herbicide use regime (S+B+H) of slash pine plantation forests in the U.S. South.

Table 2. Input cost and output price data of forest production in the U.S. South.

Table 1 shows that compared to pulpwood, sawtimber appears later in the rotation and amounts to only 23%, 27%, and 44% of the total merchantable volume, respectively, at age 15, 20, and 25. Likewise, the amounts of merchantable timber and CO2 sequestered per acre in a stand of trees at age 15, 20, and 25 are 2804.1 ft3 and 50.6 tons, 3794.0 ft3 and 68.4 tons, and 4360.4 ft3 and 78.7 tons, respectively. The post-harvest slashes are often burned as part of the site preparation before planting the next crop of trees, and the soil carbon and DOM pools are stable and vary little over time [34]. Interested readers can find the detailed information of input use, growth and yield, and output generation in the (see S1 Table).

As reported in Table 3, the oldest stand reaches financial maturity for harvesting (clear-cut) when it is 20 years old if only timber production is valued, with sawtimber and pulpwood outputs of 804.2 ft3/acre and 2450.5 ft3/acre. Based on the price and cost parameters listed in Table 2 and an annual discount rate of 6%, the total revenue, total cost, and net revenue are $2039.7, $1634.8, and $404.9 per acre per year, respectively. Such a 20-year-old stand contains 68.38 tons/acre of CO2 in its biomass of merchantable volume (40.34 tons in pulpwood and 28.04 tons in sawtimber), and the total stocking volume of the whole forest carries 521.22 tons of CO2 in its standing trees of different ages. Once the 20-year-old stand is harvest, however, the amount of CO2 contained in the HWPs on a permanent basis– 12.14 tons in sawnwood and 1.52 tons in paper and paperboard–becomes much smaller. Because of the irrecoverable residuals generated in making the products and the very short duration of paper and paperboard, this leads to over 80% of carbon sequestered in sawtimber and pulpwood quickly emitted back to the atmosphere.

Table 3. Estimated annual revenues, costs, profit, and timber and carbon outputs per acre for the standard plus bedding and herbicide use regime (S+B+H).

5. Main empirical results

Depending on the assumptions used, numerous management scenarios can be examined. Here, we concentrate on a few more representative ones in terms of whether and how the additionality and permanence principles are followed, in conjunction with the status of plantation establishment. First, we assume that for the country within which the landowner (or group of owners) resides, the baseline of its NDC is year 2000, and 2050 is its end of its commitment. The additionality principle implies that the stocking volume of any of the forest stands that have been established by 2000 are not eligible for emission offsetting and/or credit taking. As a result, we need to consider whether the plantation is fully, partially, or not yet established by the base year. Likewise, the permanence principle dictates that once a landowner decides to join a carbon emission offsetting initiative, s/he will have to stay in it until 2050.

The annual timber removals consist of sawtimber used for producing sawnwood, and pulpwood used for making paper/paperboard. Again, the IPCC guidelines indicate that sawnwood has an average service half-life of 35 years, whereas paper/paperboard has an average service half-life of only 2 years. Further, sawtimber has an incremental rate of conversion into sawnwood, ranging from 55% at a stand age of 15 years to 65% at a stand age of 25 years or more. The residuals generated from converting sawtimber to sawnwood is used for producing pulp, which is then turned into paper/paperboard, with a recovery rate of 95%.

When both carbon and timber are included in valuation with the given price, cost, and discount rate parameters, the optimal rotation age remains at 20 years, as shown in Table 3. If the carbon price goes up from $20 to $50 per ton of CO2, the rotation age increases by only one year. Thus, considering carbon sequestration by participating in an offsetting initiative has limited effect on the rotation age. This is by and large because if carbon stored in HWPs is calculated on a permanent basis and valued at a relatively low price, the same economic calculus–postponing timber harvesting would mean the incurrence of a higher opportunity cost–still holds. However, including carbon value has a more pronounced effect on profitability. With a price of $20 per ton of CO2, the net revenue rises from $404.9 to $588.6 per acre per year–a more than 45% gain compared with the timber-only scenario. Likewise, when the price goes up $50 per ton of CO2, the net revenue increases to $875.20 per acre per year.

To maintain focus and save space, we decided not to further explore the sensitivity of our findings to the changed discount rate, prices of sawtimber and pulpwood, or costs of inputs here. A curious reader can pursue this task based on the data file we have provided in the Supplementary Information. The following specific scenarios, shown in Table 4, correspond to the three different stages of the plantation establishment and the costs, prices, and discount rate listed in Table 2.

  1. If the whole plantation was established before the base year, then it is not eligible for inclusion in the offsetting accounting, and the only eligible offsetting credits are derived from the annual removal of a mature stand, assuming the annual growth is removed entirely. Under these circumstances (scenario 1-A), the additional accountable amount of stored carbon would be 13.66 tons per acre per year (i.e., 1.52 tons in paper/paperboard and 12.14 tons in sawnwood), or 683.00 tons per acre over the 50 years. On the other hand, ignoring the additionality and permanence requirements, one could mistakenly assume a CO2 offset of as much as 3,930.2 tons, including 521.22 tons in standing trees and 68.38 tons a year in pulpwood and sawtimber produced over 50 years (scenario 2-A).
  2. If the plantation has not been fully established by the base year, the landowner must complete the plantation development first. If the plantation establishment began 10 years ago, the landowner needs to take another 10 years to get it fully established before starting timber harvesting. In this case, part of the carbon stock of the plantation gained after the base year (521.22–49.82 = 471.40 tons) and the annual removals (13.66 tons) over the remaining 40 years (546.4 tons) until 2050 can be counted as offsetting credits. By the end of the commitment period, the accountable amount of CO2 would total 1017.8 tons (scenario 1-B). If the additionality and permanence principles were disregarded, the landowner might erroneously claim credits from an accumulated CO2 offset of 3,256.4 tons (scenario 2-B)– 521.22 tons in standing trees and 68.38 tons a year from pulpwood and sawtimber produced over the 40 years.
  3. If the plantation establishment has not yet begun before the base year, it would take the landowner 20 years to get it fully established and thus be eligible for offsetting credits (521.2 tons). With 30 years remaining, the annual removals can result in a CO2 offset of 409.8 tons (scenario 1-C). By 2050, the accountable CO2 will amount to 931.0 tons. In contrast, without heeding to the additionality and permanence requirements, s/he might declare a total accumulated CO2 offset of 2,576.6 tons– 521.22 tons from standing trees and 68.38 tons a year from pulpwood and sawtimber produced over the 30 years (scenario 2-C).
Table 4. Estimated carbon sequestration/storage outcomes (tons) under different scenarios for the S+B+H regime (carbon price is $20 per ton of CO2).

In sum, our results show that the outcomes of forest carbon accounting are determined by whether the PA’s additionality and permanence principles are followed, where the plantation establishment stands, and how the HWPs are treated, in addition to the basic economic factors–prices, costs, and discount rate. The estimated carbon credits vary dramatically under different combinations of these considerations.

6. Discussion and summary

This study was aimed to overcome some of the analytic challenges encountered in the current deliberation and practice of forest carbon accounting and credit taking at the micro level. These challenges center on whether an accounting exercise follows the PA’s additionality and permanence principles for carbon offsetting, how timber and carbon are incorporated into the process of forest production, and if the accounting captures varied magnitudes and durations of HWPs. Inadequate attention or an inappropriate approach to addressing these issues can cast doubt about the validity of any effort in promoting forest sector NbSs.

Our analysis has demonstrated that properly accounted for, forest carbon offsetting actions are important and credit worthy and, thus, deserve to be seriously promoted and financially rewarded. Because of the embodiment of carbon in timber, as well as the relatively low carbon prices, however, “it is not necessarily a choice of either timber or C (carbon) in reality; rather, it is a matter of both in many cases” [14]. But incorporating carbon into the valuation can alter the logic and outcome of forest management. Determining the rotation length must now pay proper attention to HWPs, because of their markedly different service lives and the disproportionality between carbon stored in sawnwood and that in paper/paperboard. It is thus vital to explore how to increase the production of sawnwood and wood-based panels to extend the overall life of carbon stored in HWPs.

Due to these variations, coupled with the permanence principle, nonetheless, the potential of forest sector NbSs to climate change mitigation, albeit significant, may not be as great as some analysts have claimed [19,35]. In the case of intensively managed pine plantations in the U.S. South, the outcome derived from the stand-level, Hatman-Faustmann approach with a neglect of the PA accounting principles and HWPs could exaggerate the amount of carbon credits a landowner may take by a factor of at least 2.76. On the other hand, while adding carbon to the valuation or raising carbon price has limited impact on the optimal rotation age, the effect on net revenue is considerable. Thus, economic analysts must form a more balanced and consistent view of the influence of carbon price on management outcomes. In addition, unless other ecosystem services than timber and carbon become prominent, the rationale for maintaining certain FES over a longer term could be called into question, because of the high capital costs of standing trees. We believe that these are important and timely findings, as the global community actively seeks NbSs to mitigate climate change [1,5].

Similarly, complying with the PA’s requirements for carbon accounting does not imply that smallholders who have only a few stands of trees cannot participate in an emission offsetting and/or trading scheme, or are not eligible for taking credits from their contributions. However, it does mean that there should be intermediary agencies who can aggregate the smallholders and bundle their individual properties, not only to make their participation feasible and trustworthy, but also to reduce the impediments and costs entailed in monitoring, reporting, and verification [15]. Innovations in the brokerage of forest carbon investment and trading are thus needed, which in turn calls for a much-improved regulatory system of the current voluntary, as well as compliant, carbon markets [3].

This study has examined the ramifications of different accounting principles and practices in the management of pine plantation forests in the U.S. South, where data on stand growth and yield, output prices, and input costs are not just available but also of higher quality. Future research should extend this type of work to other FESs, such as naturally regenerated hardwood or mixed-species forests in the northern U.S. and Canada. Also, it is worthwhile to capture the status and dynamics of other FES carbon pools, such as soil. Further, our study did not consider the possibility of generating biofuels and/or bio-chemicals from woody materials. In view of their promises to replace fossil fuels and/or non-renewable construction materials [1,36], it is yet another important opportunity for future research. In these endeavors, though, more field experiments of carbon sequestration by different FESs and storage in HWPs are warranted given that much of the current work on carbon accounting and credit taking is based on the Tier I parameters of the IPCC [7], which are relatively crude.

Finally, as stated, other than a micro-level efforts of forest carbon accounting, more comprehensive assessments of the forest sector’s potential in carbon emission reduction and/or removal have been done at the regional or national level [8,9,37]. There also exist alternative approaches, and their outcomes seem to deviate as well. It is necessary to investigate their appropriateness in light of the PA principles for carbon accounting and the relevant considerations of forest ecology and economics.

Supporting information

S1 Table. Determining the economic performance of pine plantations in the U.S. South.



The authors are grateful for the comments and suggestions made by their colleagues including Bill Hyde, Shashi Kant, Sen Wang, Lloyd Irland, and David Wear. They are also grateful for Renee Tilley’s editing assistance.


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