Global climate change and optimal forest management

A policy question of current interest is how to cope with climate change. One suggestion is to use forests to offset carbon emissions, and therefore, reduce the threat of global warming. This study develops a rigorous model of the relationship between optimal forest harvesting regimes and carbon sequestration. The theoretical analysis integrates the carbon sequestration life cycle into the Faustmann framework and develops optimal cutting rules when carbon sequestration benefits are considered. The carbon life cycle includes both the sequestration of carbon and its ultimate re-release into the atmosphere. A case study of Douglas fir applies the theoretical framework. -Authors