Forest Biophysical Models: Challenges of and Opportunities for use in Economic Models Presented at Forestry and Agriculture Greenhouse Gas Modeling Forum Shepherdstown, WV October 11, 2002 Presented by Brian Murray P.O. Box 12194 · 3040 Cornwallis Road · Research Triangle Park, NC 27709 Phone: 919-541-6468 · Fax: 919-541-6683 · bcm@rti.org · www.rti.org

Policy/economic setting for GHG mitigation Market or government offers $X/ton of C sequestered in time period t … Principle of marginality: Landowners will undertake sequestration until the marginal cost = $X/ton Economic models need to capture The resource and opportunity costs of sequestration actions How these actions translate to changes in terrestrial carbon stocks over time Ex ante perspective Projecting the carbon and monetary consequences of alternative future actions

Mitigation analysis needs (continued) Sequestration actions are location-specific, so change in forest C stock estimates needed by … Region Forest type Site conditions Previous land use Harvested product destination FORCARB, tied to forest inventory data, captures these elements Note: Economic models do not need a lot of C pool detail, except for product pool disposition over time Also need info on Ct effects of changes in Management actions Climatological and other natural conditions

A common approach for calibrating C changes to forest management regimes … is this the best way ? FORCARB output ATLAS calibration “Low” management “High” Forest type A Region B Site index 60-79 Age class 15-20 Timber growth (ft3/yr) 40 30 50 Carbon flux (tC/yr) Tree 1.2 0.9 1.5 Soil .05 0.05 Understory .03 0.03 Litter .02 0.02 Total 1.3 1.0 1.6

Question: Can we get the folllowing from FORCARB2 ? Most recent tabular outputs, reflecting changes of last several years Most people rely on the tables published in the American Forests pub. of 1996 Underlying detail on the sub-models (equations, parameters, regional differences etc…) Inventory detail used for public lands components

Temporal aspects of C Stock Changes due to climate and other factors Trend E.g., effects of changes in climate, precip, CO2, and other factors on forest growth Variability If landowners are to be paid directly on actual C increments, payments will vary with yields Variability will affect adoption probability of risk averse landowners EU($1, 2=1) > EU($1, 2=2)

Can Economic Models offer Anything to Biophysical Models? Economic drivers of ecological change Harvesting Management Land Use Change