Generation Mechanism of Supply and Demand Gap of Forestry Carbon Sequestration Based on Evolutionary Game: Findings from China

Abstract

Aiming at the gap between supply and demand in forestry carbon sequestration trading, an evolutionary game model of forest farmers, emission-controlled enterprises (ECEs), and the government is established, where the purchasing behavior of ECEs is divided into offsetting carbon emission and speculation in the carbon emission trade market. By sorting out the stable conditions of each equilibrium point, the causes of the gap between supply and demand are analyzed to explore the coupling mechanism between financial means and market regulation. At last, a numerical case of actual background is applied to verify the rationality of the conclusions. The study found that: (1) The combination of government financial subsidies with the market mechanism is based on subsidies to ECEs. (2) The best time for the government to reduce financial subsidies to forest farmers is when the carbon quota is tightened and more industries are included in the carbon trading system; the best time for the government to reduce subsidies to ECEs is when the carbon quota tightening policy dominates. (3) The reasons for market imbalance in the early and late stages of forestry carbon neutralization mechanism development are different.