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Abstract

Generating Carbon Credits Under Different Forest Management Practices in Ponderosa Pine Ecosystems in Wyoming A. Chatterjee 1 , S. Mooney 2 , D.B. Tinker 3 , G.F. Vance 1 , J. Arnold 4 , B. Haggenson 4 , and P.D. Stahl 1 .

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Abstract

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  1. Generating Carbon Credits Under Different Forest Management Practices in Ponderosa Pine Ecosystems in Wyoming A. Chatterjee1, S. Mooney2, D.B. Tinker3, G.F. Vance1, J. Arnold4, B. Haggenson4, and P.D. Stahl1. 1. Renewable Resources, University of Wyoming, 2. Economics, Boise State University, 3. Botany, University of Wyoming and 4. Wyoming State Forestry Division Abstract Increased atmospheric concentrations of carbon dioxide (CO2) are thought to lead to climate change and have spawned national and international policies to slow down the rate of CO2 emissions. Forests can play a role in reducing atmospheric concentrations of CO2 as they are a global carbon (C) sink. The stock of C sequestered in the standing forest and its soils increases with increasing forest biomass over time. Old growth forests, which may have large stocks of C, may exhibit reduced annual C sequestration rates since net biomass growth is modest or negligible. In contrast, a young forest may have a relatively modest stock of C due to its small total biomass, but sequesters C at a fast rate due to rapid growth of juvenile trees. There has been considerable interest in using economic incentives to reduce atmospheric concentrations of CO2 through the development of a C-credit market. If changes in forest management can generate C-credits at a cost competitive with credits from other sectors of the economy this could present an opportunity to sell a new commodity from Wyoming's forests. This study examines the economic costs of creating C-credits from three management practices (control, even aged, and uneven aged) in a ponderosa pine ecosystem in Wyoming. Introduction: Sustainable forest management practices can increase economic returns and ecosystem health. Carbon storage within the forest ecosystem is an indicator of sustainable forest health and provides an opportunity for forest managers to generate additional income from the stand if the stored C can be sold in a C-credit trading program. This poster evaluates the economic and C-sequestration potential of three forest management practices within a ponderosa pine ecosystem. Ponderosa pine covers the largest forested area (0.66 million acres) under private ownership in Wyoming. Results: Table 2: Lifetime amortized value ($/ac/yr) and annual average increase in C (Mg/ac/yr). Table 3. Change in Annuity Profit and annual average C (in bracket) due to change in management practice. Table 4. Change in Annuity profit per change in C for change in management practice. Materials and Methods: Treatment details: For this study we selected three ponderosa pine stands in the Black Hills National Park, NewCastle, WY. 1. Control: This site was estimated to be established in 1906, since the stand age is ~100 years. There was no managed over its lifetime, but was clear-cut in 2006. 2. Even Aged: This site was established in 1960 following a fire. The site was harvested in 1990 at around 30 years old, underwent precommercial thinning in 1995 and a firewood sale in 1997. 3. Uneven Aged: This site was established in 1896, and its age in 1992 (the time of last harvest) was 96 years. The stand was also harvested in 1979 and 1992. Economic Analysis: A personal interview of state land personnel knowledgeable about historical management prescriptions on each stand provided information about the timber yields and revenues obtained from each land parcel, as well as the costs of any interim management prescriptions. There was inadequate information about timber harvest or costs on plots that had mixed ownership over the lifetime of the stand. The following assumptions were made to fill in these information gaps: ● For the even aged stand, we assume that the final harvest will occur at age 75, in 2035. ● For the uneven aged stand, due to lack of information beyond 1970, we assumed that first selective harvest was made at a 65 yr. stand age in 1961, yielding 3 MBF/ac (MBF=thousand board feet). A firewood sale was assumed to yield 1MBF/ac. (The assumptions are based on information provided by the state forest division and literature available for the Black Hills area.) All cost and benefits were adjusted to constant 2006 dollars (using the consumer price index) to facilitate comparison between the three practices. This is an equivalent procedure to discounting future costs and benefits to get a net present value that can be used to compare investments. Because each investment (rotation practice) is undertaken over a different time period, adjusted net revenue from each treatment was annualized to account for the fact that each treatment occurred over a different time period using the following formula: Estimation of C pool: The belowground ecosystem C pool for each stand was estimated by analyzing soil and root samples. The aboveground C pool was determined using allometric equations. Final even-aged timber production was calculated assuming a mean annual increment of 40 cubic ft. (Boldt et al., 1983). Carbon yield from merchantable wood was calculated using the following multipliers specific for ponderosa pine (Birdsey, 1996). Table 1: Multipliers for converting merchantable wood (MBF) to tree biomass. In table 3, change in annuity profit to switch from one management practice to another was calculated as from Annuity profit from alternative practices minus Annuity profit from original practice. Average annual change in C on each site (Mg/ac/yr) was also calculated as annual change in C from alternative practice minus annual change in C from original practice (values in bracket). If the value is positive, it represents more profit and C sequestration from alternative management than original. Only two changes in management practices result in additional C sequestration: (1) Control to even aged or uneven aged and (2) Uneven aged to even aged stand. Where; R= value of annual payment, V0= Net revenue of each treatment, n = time period of investment, i = interest rate (assumed to be 4.5%). In table 4, change in annuity profit/ac per additional Mg C sequestered, which was calculated by dividing the change in annuity profit/ac by the average annual change in C/ac. Switching from the control treatment to either the even aged or uneven aged treatment increases expected annual profits indicating that the managers would not require additional compensation for making this change. It is possible that managers may stay with the control treatment to pursue goals other than profit maximization. The negative value indicates that a switch from uneven-aged to even-aged management practice require an annual payment of $47.05 per Mg of C sequestration. Conclusion: The even-aged stand sequestrated C at a greater rate than the other two stands, but considering the economic profit only from timber sale, selective harvest management or uneven aged stand is able to obtain greater return on investment than even-aged stand. Forest manager can convert to even-aged management from selective harvest if they receive annually payments of at least $47.05 per Mg of C sequestered. There are many ways to structure payments for C-credits. The type of market and contract structure will affect the economic attractiveness of this alternative. References: Birdsey, R.A. 1996. Carbon storage in United States Forests. In R. N. Sampson and D. Hair (eds), Forests and global change, Vol. II: opportunities for improving forest management, Washington, DC: American Forests. Boldt, C.E., R.R. Alexander, and M.J. Larson. 1983. Interior ponderosa pine in the Black Hills. In: Silvicultural systems for the major forest types of the United States. Agricultural Handbook 445. Washington, D.C.: U.S. Department of Agriculture: 80-83.

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