Investment timing and option value of afforestation carbon sequestration project under carbon trading mechanism

Abstract

Investment timing and option value of afforestation carbon sequestration project under carbon trading mechanism [J]. Resources

Quantifying the Carbon Sequestration Costs for Pinus elliottii Afforestation Project of China Greenhouse Gases Voluntary Emission Reduction Program: A Case Study in Jiangxi Province

“…Under the current market and technical conditions, the carbon sink costs of the afforestation project is high, and obviously even exceeds the average price of the carbon sink. According to the actual situation of the nine pilot ETSs in china, the current price of forestry carbon sinks in China is between 14~90 Yuan/tCO 2 e [18,45,46]. Although there is a possibility for project owners to engage in afforestation projects for carbon sequestration, project owner may still choose to maintain the original non-carbon sequestration production, because the average carbon price (20 yuan/tCO 2 e) is lower than the carbon sequestration costs of P. elliottii afforestation projects [46].…”

“…Firstly, the key indicators that affect the cost of sequestration, such as afforestation costs, carbon sink transaction costs, lease cost, and land-use opportunity costs, have been considered in this study. However, there are still many factors that affect carbon sink costs, such as site conditions, stand structure, operating methods, related policy factors, landowner's wishes, etc., [35,46]. Thus, considering the difference of the above factors of different tree species in different areas, the carbon sink costs still need further study.…”

“…Furthermore, labor prices and discount rate, carbon sequestration cost for afforestation project are likely to continue rising leading to the real risk of carbon sink afforestation projects being abandoned. Therefore, it is necessary to continue to establish and improve the forestry carbon sink compensation mechanism in the future [46,51]. Thirdly, the government should also encourage wood processing companies to make technological innovations to produce and sell durable wood products.…”