Carbon and timber management in Western Oregon under tax-financed investments in wildfire risk mitigation

Abstract

We examine how forest taxation should be designed when tax revenues are used to finance expenditures on wildfire risk mitigation and when forest carbon storage has value. A model is solved sequentially in two stages by a forest tax planner and a representative private landowner. Our results show that neither an acre-based fee nor a unit-based harvest tax is able to incentivize the same levels of sequestration as a carbon price. However, a neutral tax like the acre-based fee is preferred when the external benefits of carbon sequestration are captured by the private landowner.

Citation

Rossi, David; Kuusela, Olli-Pekka. 2023. Carbon and timber management in Western Oregon under tax-financed investments in wildfire risk mitigation. Journal of Agricultural and Resource Economics. 48(2):376–397.