Considerations for Valuing Atmospheric Carbon

The creation of a carbon trading market is being considered as one way of combating global climate change. A carbon market would allow emitters to buy and sell pollution credits in order to limit the amount of carbon dioxide put into the atmosphere. The following are some factors that need to be considered when valuing atmospheric carbon.

There are various factors that are important to the valuation of atmospheric carbon. One factor is the understanding of how much carbon is stored in forests over time, and how changes in the frequency of disturbances affect forests. Computer models simulate carbon storage in forest stands over time, and how different types of disturbances in the forest, such as logging and fire, influence carbon storage. Optimal harvest patterns of forest stands are computed, and could be useful for the long-term planning of forest resources. It is possible to model how much carbon is stored in the various types of living and dead plant material in each tree species in a forest stand, and how much carbon is stored in trees over time. Comparisons can be made between young forests and old-growth forests. Old-growth forests have more carbon in storage than young forests, and random disturbance patterns lead to a higher average amount of carbon in storage than do regular disturbance patterns.

Finally, in order to assess the carbon storage rates in a forest, it is necessary to have a good estimate for the mean carbon storage of a forest. One computer model was used to calculate mean carbon storage for various forest stands, and found that variation in the amount of carbon stored over time decreases as the number of stands increases and as the observation period increases.

Another factor is the understanding of economic aspects of carbon valuation. Economists study how carbon trading impacts ecosystems, and how management of these ecosystems would change as the price of carbon changed. Some questions that economists attempt to answer are: 1) How would land managers respond to positive carbon prices?; 2) How does the cost of carbon sequestration in forests compare to the cost of alternative approaches?; and 3) What are the environmental implications of carbon sequestration in forests?

The price of carbon is influenced by the marginal cost of abatement; that is that it becomes progressively more expensive to remove one more unit of carbon from the atmosphere. Another consideration of economists is the value of future benefits of carbon storage, taking discounting into account. Additionally, predicting future carbon prices is an important factor to consider when valuing this resource.

Valuing atmospheric carbon is a challenging task if there is to be a viable carbon trading market. Whether or not such a market would actually influence global climate change remains to be seen, but the idea is popular in many circles. Either way, this would only be one part of a larger strategy for altering the course of climate change.