Quantifying the Carbon Sequestration Costs for Pinus elliottii Afforestation Project of China Greenhouse Gases Voluntary Emission Reduction Program: A Case Study in Jiangxi Province

Abstract

Afforestation and reforestation (AR) is an important component of China’s Greenhouse Gases (GHG) Voluntary Emission Reduction Program, acting as a valuable nationwide carbon sink. Although a number of studies have explored the costs of creating a carbon sink, such an assessment is lacking for China’s GHG Voluntary Emissions Reduction Program. This study develops an economic carbon sink costs measurement model for the Pinus elliottii afforestation project, based on the land opportunity cost method, which incorporates carbon sink transaction costs and leakage costs. From this, an empirical analysis on the carbon sink costs and its sensitivity factors was conducted. The results show that, firstly, the carbon sequestration costs of afforestation projects are generally high, ranging from 44.2 Yuan/tCO2e to 425.4 Yuan/tCO2e with and without considering the benefits of wood, respectively. This is higher than the current average carbon sink price of 20 Yuan/tCO2e. Secondly, forestry carbon sink transaction costs have a positive impact on carbon sequestration costs, but the impact is weak. Thirdly, carbon sequestration costs are negatively affected by timber prices but positively influenced by increasing labor prices and discount rate, which is not conductive to the development of carbon sink afforestation projects. In order to strengthen role of forestry in combating climate change, the study holds that the government departments should take measures to reduce carbon sink transaction costs, establish and improve the forestry carbon sink compensation mechanism in the future, and encourage wood-processing companies to make technological innovations to produce and sell durable wood products. The project owners can explore multiple operating models to increase their revenue, including market and non-market benefits, when the carbon sink afforestation project has been launched according to relevant methodologies.