Fire Risk and the Economics of Sequestering Carbon in Forests

The impact of fire risk on slash pine (Pinus elliottii) plantations managed for the joint production of carbon and timber benefits was investigated. A Hartman model for determining the optimal rotation age and Land Expectation Value (LEV) for a stand with both carbon and timber benefits was extended to include the risk of fire. Information from this model was then used to determine optimal rotation age, LEV, carbon supply and timber supply as a function of fire risk and the price of carbon. The results indicate that fire risk reduces all of these variables and this reduction is greater for higher carbon prices. These results suggest that landowner's would respond less to a carbon market when the level of fire risk is relatively high.