The Policy Challenge of Creating Forest Offset Credits : A Case Study from the Interior of British Columbia

Summary: This paper provides an overview of the role that forestry activities can play in mitigating climate change. The price of carbon offset credits is used for incentivizing a reduction in the release of CO2 emissions and an increase in sequestration of atmospheric CO2 through forestry activities. Forestland owners essentially have two options for creating carbon offset credits: (1) avoid or delay harvest of mature timber; or (2) harvest timber and allow natural regeneration or regeneration with ‘regular’ or genetically-enhanced growing stock, storing carbon in post-harvest products, using sawmill and potentially logging residues to generate electricity. In this study, a model representative of the Quesnel Timber Supply Area (TSA) in the BC interior is developed. The objective is to maximize net discounted returns to commercial timber operations (and sale of downstream products) plus the benefits of managing carbon fluxes. The model tracks carbon in living trees, organic matter, and, importantly, post-harvest carbon pools and avoided emissions from substituting wood for non-wood in construction or wood bioenergy for fossil fuels. Model constraints ensure that commercial forest management is sustainable, while carbon prices incentivize sequestration to ensure efficient mitigation of climate change. The results are confirmed more generally by comparing the carbon fluxes derived from the integrated forest management model with those from a Faustmann-Hartman rotation age model that explicitly includes benefits of storing carbon. One other question is addressed: If carbon offsets are created when wood biomass substitutes for fossil fuels in power generation, can one count the saved emissions from steel/cement production when wood substitutes for non-wood materials in construction?