Biomass Energy and Climate Neutrality: The Case of the Northern Forest

Abstract

We test the assumption that harvesting timber for energy production is assumed to have a carbon-neutral effect on climate. Our dynamic multiple-harvest Faustmann optimal rotation model of the Northern Forest and energy production in New Hampshire indicates that it is inappropriate to assume climate neutrality. We show that accounting for carbon means that timber bioenergy production causes negative externalities that lead to longer rotations. On average, carbon loss is 10.05 metric tons of stored carbon per hectare. To avoid this carbon release, logging rotations should be increased by up to 36%, or 12 years. (JEL Q23, Q42)