Estimating Leakage from Forest Carbon Sequestration Programs

Brian C. Murray, Bruce A. McCarl and Heng-Chi Lee


Leakage from forest carbon sequestration—the amount of a program’s direct carbon benefits undermined by carbon releases else-where—depends critically on demanders’ ability to substitute non-reserved timber for timber targeted by the program. A nalytic, econometric, and sector-level optimization models are combined to estimate leakage from different forest carbon sequestration activities. Empirical estimates for the United States show leakage ranges from minimal (< 10%) to enormous (> 90%), depending on the activity and region. These results suggest that leakage effects should not be ignored in accounting for the net level of greenhouse gas offsets from land use and forestry mitigation activities. (JEL Q25, Q32)

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