Take this money, and light it on fire

of the annual budget of the Forest Service, the Forest Service used for wildfire suppression activities –
A) 13 percent in 1991; and
B) 45 percent in 2007

That is in Section 4901 (in Title IV, Subtitle I) of the Lieberman-Warner climate policy bill (S. 2191). In response the bill proposes to use the revenues generated by the auction of emission allowances to provide up to $1.1 billion per year for emergency firefighting efforts.

Assorted links

1. British Columbia is implementing a revenue-neutral carbon tax. Mike Moffatt is a fan.

2. Oil closed above $100 per barrel for the first time ever yesterday (in nominal terms). The WSJ Environmental Capital guys immediately called it speculation rather than fundamentals.

3. In the face of high fuel prices, residents in the Northeast U.S. are switching back to wood-burning stoves, but this move carries its own costs, particularly to local air quality.

4. Cameroon wants to rent a forest — preferably to conservationists — but doesn’t seem to have any takers. The article points out that they may be above the market-clearing price.

5. Ezra Klein praises density.

6. George Monbiot, writing about climate change policy, is offended that economists place a monetary value on human life, and that hence there is a chance “we would then find that it makes economic sense to kill people.” One of the Free Exchange bloggers defends the use of benefit-cost analysis, while Tim Haab provides a straightforward explanation and able defense of why economists place a value on life. (Hint: it’s because we all do — they’re called trade-offs.)

Bali news roundup: Deal unlikely for targets, but probable for forests

Today’s New York Times and Christian Science Monitor both report that the current UN talks in Bali — intended to design a road map for negotiations on a post-2012 climate architecture to be concluded by 2009 — are unlikely to result in agreement between the EU and the US on a specific target for reductions in greenhouse gas emissions. The EU wants a commitment that industrialized countries will cut emissions by 25 to 40 percent from 1990 levels by 2020, while the US is opposed to including specific targets in the road map, preferring to put off discussion of emissions reduction commitments — and perhaps whether such commitments will be mandatory — until later negotiations.

Over at FT.com, meanwhile, there is nice short article on a likely agreement at Bali that would aim to reduce emissions from deforestation. The article is highly recommended for those who want a primer on some of the issues surrounding measuring deforestation and properly encouraging conservation. Here’s an excerpt:

Forestry is one of the least contentious issues at the talks but there has been disagreement over how to give financial incentives to poor countries to retain their trees in the face of illegal logging and other forms of exploitation.

One option would be to grant countries carbon credits for their trees, in the same way that projects such as wind farms or solar power are awarded credits for cutting emissions under the “clean development mechanism” of the Kyoto protocol. However, the United Nations said this would be impossible because if the trees in one area were protected, loggers or farmers could simply move elsewhere.

Another option, which Brazil is understood to favour, would be for countries to be given credit for curbing deforestation at a national level.

For those who are ready for more of a graduate course in reducing deforestation emissions, Environmental Economics recently had a couple of posts that explored this topic. The second, basically a guest post from Brent Sohngen, is particularly recommended. I’m hoping to write more about this topic in the next couple weeks.

Money does grow on trees

The U.S. Government, in conjunction with some NGOs, continues its program of swapping debt relief for forest conservation:

As part of the U.S. Tropical Forest Conversation Act, the United States will spend US$12.6 million (€9 million) to buy back Costa Rica’s debt at discounted rates. Conservation International and The Nature Conservancy will each contribute US$1.26 million (€890,000). Together, with interest, the money will be enough to pay down US$26 million of the Central American country’s debt, according to the agreement.

I’d like to highlight two aspects of this policy.

Seeing the forests for the trees

I went to an interesting seminar today at Resources for the Future, given by Brent Sohngen from Ohio State, on the role that forests could play in climate stabilization. He’s done some modeling that tries to get a handle on how much carbon sequestration you could get from forests globally through two means: 1) reforesting some areas of the world (called afforestation), and 2) preventing deforestation that would otherwise occur in other areas. Here’s my summary from hearing his talk and participating in the interesting discussion that followed:

1) His results showed that in theory forest sequestration could significantly contribute to global reductions in carbon emissions, accounting for around 20% of the total reductions over the next century.

2) Effectively incorporating forest sequestration into a global climate policy could reduce global costs significantly.

3) The biggest portion of available sequestration is in the developing world, and is avoided deforestation that will happen in a business-as-usual world. In fact, avoided deforestation in South America and Africa could potentially account for more than half of near-term — in the next 30 years — global emissions reductions. A much smaller portion of available sequestration is afforestation, mostly in developed countries.

4) Monitoring these reductions would have to be both local and global in scale: local because you have to account for all the trees, and global because it does the climate no good to protect one stand of trees here if someone else comes along and cuts down another strand over there. Literally every tree — globally — would have to be monitored to make this work. Project-based activities like those that many offset programs have used thus far won’t be effective because the more you specifically protect some forests the more other forests will come under pressure.

My impressions from the talk? There is a big payoff for the world in cheap reductions if we can get the rules and institutions right; however, that’s a huge if. I am somewhat — but not too — worried about the local/global scale of an effective global forest registry; I think remote-sensing satellite data can help address this. I am very skeptical, however, that in countries like Brazil or [insert any African country here] that good institutions — effective governance, private property rights, etc. — can be implemented within the next few years in order to avoid the massive amounts of deforestation that are projected to occur over the next couple decades. Basically, I think that there are too many very real but hard-to-measure transaction costs in these countries that will prevent a carbon price — even a relatively high carbon price — from translating into substantive forest sequestration.