Policy Alternatives to Increase the Demand for Forest-Based Carbon Sequestration

Summary National, regional, and international actors can use a range of different policies to increase the demand for forest-based carbon sequestration. Demand for these services has the potential to significantly impact the decisions of landowners, land managers, and private investors by increasing the incentives for creation or maintenance of forest ecosystems. The Kyoto process is at the center of discussions regarding the market for carbon services although it is not the only relevant source of demand. The authors recommend an approach to climate change regulation that requires actions beyond the current scope and term of the Kyoto Protocol. The four areas addressed in this paper are: (1) increasing regulation-based demand for carbon reductions by improved implementation and increasing coverage, (2) increasing voluntary demand for carbon reductions, (3) increasing the percentage of carbon reduction that derives from land use, land use change, and forestry, and (4) ways to stimulate demand for forest-based carbon sequestration generally by reducing transaction costs and contractual risks and in a particular country by recommending policy changes in Panama.