Ruben N. Lubowski

Fixing a critical climate accounting error

Rules for applying the Kyoto Protocol and national cap-and-trade laws contain a major, but fixable, carbon accounting flaw in assessing bioenergy. The accounting now used for assessing compliance with carbon limits in the Kyoto Protocol and in climate legislation contains a far-reaching but fixable flaw that will severely undermine greenhouse gas reduction goals (1). It does not count CO2 emitted from tailpipes and smokestacks when bioenergy is being used, but it also does not count changes in emissions from land use when biomass for energy is harvested or grown. This accounting erroneously treats all bioenergy as carbon neutral regardless of the source of the biomass, which may cause large differences in net emissions. For example, the clearing of long-established forests to burn wood or to grow energy crops is counted as a 100% reduction in energy emissions despite causing large releases of carbon.

The End of Deforestation in the Brazilian Amazon

Government commitments and market transitions lay the foundation for an effort to save the forest and reduce carbon emission. Brazil has two major opportunities to end the clearing of its Amazon forest and to reduce global greenhouse gas emissions substantially. The first is its formal announcement within United Nations climate treaty negotiations in 2008 of an Amazon deforestation reduction target, which prompted Norway to commit

Land-use change and carbon sinks: Econometric estimation of the carbon sequestration supply function

1 billion if it sustains progress toward this target (1). The second is a widespread marketplace transition within the beef and soy industries, the main drivers of deforestation, to exclude Amazon deforesters from their supply chains (2) [supplementary online material (SOM), section (§) 4]. According to our analysis, these recent developments finally make feasible the end of deforestation in the Brazilian Amazon, which could result in a 2 to 5% reduction in global carbon emissions. The

The effects of potential land development on agricultural land prices

7 to

Comparing climate and cost impacts of reference levels for reducing emissions from deforestation.

18 billion beyond Brazils current budget outlays that may be needed to stop the clearing [a range intermediate to previous cost estimates (3, 4)] could be provided by the REDD (Reducing Emissions from Deforestation and Forest Degradation) mechanism for compensating deforestation reduction that is under negotiation within the UN climate treaty (5), or by payments for tropical forest carbon credits under a U.S. cap-and-trade system (6).

Structuring economic incentives to reduce emissions from deforestation within Indonesia

Abstract If the United States chooses to implement a greenhouse gas reduction program, it would be necessary to decide whether to include carbon sequestration policies—such as those that promote forestation and discourage deforestation—as part of the domestic portfolio of compliance activities. We investigate the cost of forest-based carbon sequestration by analyzing econometrically micro-data on revealed landowner preferences, modeling six major private land uses in a comprehensive analysis of the contiguous United States. The econometric estimates are used to simulate landowner responses to sequestration policies. We treat key commodity prices as endogenous and predict carbon storage changes with a carbon sink model. Our estimated sequestration costs exceed those from previous engineering cost analyses and sectoral optimization models. Our estimated sequestration supply function is similar to the carbon abatement supply function from energy-based analyses, suggesting that forest-based carbon sequestration merits consideration in a cost-effective portfolio of domestic US climate change strategies.

Enduring Impacts of Land Retirement Policies: Evidence from the Conservation Reserve Program

We conduct a national-scale study of the determinants of agricultural land values to better understand how current farmland prices are influenced by the potential for future land development. The theoretical basis for the empirical analysis is a spatial city model with stochastic returns to future land development. From the theoretical model, we derive an expression for the current price of agricultural land in terms of annual returns to agricultural production, the price of recently developed land parcels, and expressions involving model parameters that are represented in the empirical model by nonlinear functions of observed variables and parameters to be estimated. We estimate the model of agricultural land values with a cross-section on approximately three thousand counties in the contiguous U.S. The results provide strong support for the model, and provide the first evidence that option values associated with irreversible and uncertain land development are capitalized into current farmland values. The empirical model is specified in a way that allows us to identify the contributions to land values of rents from near-term agricultural use and rents from potential development in the future. For each county in the contiguous U.S., we estimate the share of the current land value attributable to future development rents. These results give a clearer indication of the magnitude of land development pressures and yield insights into policies to preserve farmland and associated environmental benefits.

Linking Reduced Deforestation and a Global Carbon Market: Impacts on Costs, Financial Flows, and Technological Innovation

The climate benefit and economic cost of an international mechanism for reducing emissions from deforestation and degradation (REDD) will depend on the design of reference levels for crediting emission reductions. We compare the impacts of six proposed reference level designs on emission reduction levels and on cost per emission reduction using a stylized partial equilibrium model (the open source impacts of REDD incentives spreadsheet; OSIRIS). The model explicitly incorporates national incentives to participate in an international REDD mechanism as well as international leakage of deforestation emissions. Our results show that a REDD mechanism can provide cost-efficient climate change mitigation benefits under a broad range of reference level designs. We find that the most effective reference level designs balance incentives to reduce historically high deforestation emissions with incentives to maintain historically low deforestation emissions. Estimates of emission reductions under REDD depend critically on the degree to which demand for tropical frontier agriculture generates leakage. This underscores the potential importance to REDD of complementary strategies to supply agricultural needs outside of the forest frontier.

The Potential for REDD+: Key Economic Modeling Insights and Issues

We estimate and map the impacts that alternative national and subnational economic incentive structures for reducing emissions from deforestation (REDD+) in Indonesia would have had on greenhouse gas emissions and national and local revenue if they had been in place from 2000 to 2005. The impact of carbon payments on deforestation is calibrated econometrically from the pattern of observed deforestation and spatial variation in the benefits and costs of converting land to agriculture over that time period. We estimate that at an international carbon price of

Linking reduced deforestation and a global carbon market: implications for clean energy technology and policy flexibility

10/tCO2e, a “mandatory incentive structure,” such as a cap-and-trade or symmetric tax-and-subsidy program, would have reduced emissions by 163–247 MtCO2e/y (20–31% below the without-REDD+ reference scenario), while generating a programmatic budget surplus. In contrast, a “basic voluntary incentive structure” modeled after a standard payment-for-environmental-services program would have reduced emissions nationally by only 45–76 MtCO2e/y (6–9%), while generating a programmatic budget shortfall. By making four policy improvements—paying for net emission reductions at the scale of an entire district rather than site-by-site; paying for reductions relative to reference levels that match business-as-usual levels; sharing a portion of district-level revenues with the national government; and sharing a portion of the national governments responsibility for costs with districts—an “improved voluntary incentive structure” would have been nearly as effective as a mandatory incentive structure, reducing emissions by 136–207 MtCO2e/y (17–26%) and generating a programmatic budget surplus.