A global analysis of the cost-efficiency of forest carbon sequestration
This paper proposes a ranking of the countries where forest carbon sequestration is
the most cost-efficient among 166 countries for which data are available. Taking into
account the main cost factors leads to a more nuanced ranking of the countries to
be favoured for cost-efficient forest carbon sequestration compared to the assumption
that these would always be in tropical areas with high rainfall. The ranking reflects
the differences in the opportunity cost of land use and labour cost (production costs),
the quality of the business environment (transaction costs), natural conditions (forest
productivity), wildfire risk and the avoided GHG emissions from alternative land use.
Cost-efficiency also depends on the type of forest project (afforestation, reforestation
or forest conservation) and how private (wood harvest) and non-private (environmental
and social) co-benefits are counted. A sensitivity analysis is undertaken to examine
the robustness of the results with respect to uncertainties in values of the cost
and quantity factors of forest carbon sequestration. The results support the view
that forests can be a cost-efficient way to offset GHG emissions and that significant
cost reductions are possible by targeting the country and sub-national regions in
which to locate forest carbon sequestration projects. The report also reviews the
literature on the significance and cost of forest carbon sequestration and provides
an overview of forest carbon offset schemes.
Published on November 30, 2021
In series:OECD Environment Working Papersview more titles