Combining an inter-sectoral carbon tax with sectoral mitigation policies: Impacts on the French forest sector

Abstract

As France works out its plan to tackle climate change issues, questions are arising in the forest sector as to how sectoral mitigation programs such as those designed to enhance fuelwood consumption or to stimulate in-forest carbon sequestration may coincide with an inter-sectoral program such as an economy-wide carbon tax. This paper provides insights into this question by exploring the impacts of (1) a combination of a carbon tax and a fuelwood policy, and (2) a combination of a carbon tax and a sequestration policy on (i) the economy of the forest sector, and (ii) the dynamics of the forest resource. To do this, we used a modified version of the French Forest Sector Model (FFSM) and carried out simulations on a 2020 time horizon. Basing our analysis on the fuelwood sector, we showed that wood producers always benefit from the combination of a carbon tax with either a fuelwood policy or a sequestration policy at the national level. Conversely, and although it favors wood products instead of non-wood substitutes, a carbon tax always decreases consumer surpluses by increasing wood product prices. As a consequence, the combination of a carbon tax with sectoral policies is likely to raise questions about the political economy of the mitigation program. This is particularly true in the case of a combination of a carbon tax with a sequestration policy, which already decreases consumer surpluses. We eventually showed that by increasing transport costs between domestic regions, the carbon tax reallocates production patterns over French territory which could lead to the necessity of a regional breakdown of policy-mixes in the forest sector

Economics of forest carbon storage and the additionality principle

“…The payment leads to a small decrease in aggregate harvest level, but causes a sufficiently large increase in timber price so that the profit becomes larger. Similar results have been reported in Lecocq et al (2011) and Caurla et al (2013). The non-timber benefits increase with carbon price as well.…”

Potential of Birch (Betula pendula Roth and B. pubescens Ehrh.) for Forestry and Forest-Based Industry Sector within the Changing Climatic and Socio-Economic Context of Western Europe

“…Timber construction is by far the dominant driver and growing market for wood products in Europe [166,169]. Carbon taxes may also favor the use of wood raw materials for carbon sequestration and substitution of non-renewable raw materials [166,171]. Recent legislation in France aims to introduce mandatory wood percentages in new constructions and enhance the requirements for thermal efficiency [166].…”

“…Despite the strong competitive position of the birch product import from Northern Europe, the Baltic countries, and Russia to Western Europe, there is an interest in Western Europe to develop and exploit local resources to avoid extra sourcing and transportation of raw materials and products, associated with rising prices. This trend would be supported by introducing a carbon tax in European countries [171]. Moreover, local production is becoming trendier and improves the image of a company.…”

Agricultural rent in land-use models: comparison of frequently used proxies

“…Forestry rents are approximated by expected returns estimated by the partial-equilibrium model FFSM++ (Caurla and Delacote, 2012;Caurla, Delacote, Lecocq, Barthès and Barkaoui, 2013;Lobianco, Delacote, Caurla and Barkaoui, 2015) developed by the Forestry Economics Laboratory at the French Agricultural Research Institute (INRA) in Nancy.…”