Human land use affects the climate through various channels. This thesis focuses on the optimal (i.e. welfare-maximizing) regulation of land use sector climate impacts using market-based instruments, such as taxes and subsidies. The thesis consists of four articles and a summary chapter. Each article focuses on a separate aspect of land use sector climate policy.
The first article outlines a comprehensive tax policy for jointly regulating carbon storage in biomass, soils and products. Considerations regarding soil carbon storage are emphasized.
The second article concerns the regulation of CO2 emissions from the energy use of logging residues. The harmfulness of these emissions is compared with that of fossil emissions. A way to harmonize the carbon taxation of the both energy sources is presented.
The third article regards the application of the additionality principle to forest carbon subsidies. In the stand-level context it appears that the additionality principle can be implemented without distorting the optimal rotation, by reclaiming subsidies for baseline carbon storage by a site productivity tax on forests. However, at the market-level such a tax distorts the optimal rotation and the optimal land allocation. These distortions can be avoided, if the excess subsidies are eliminated by general land taxation (which also targets other land use).
The fourth article presents a new concept: the Social Cost of Forcing (SCF), which is the social cost of the marginal unit of radiative forcing at a given moment. It is a fundamental price that can be used to value different forcing agents. Forcing agents’ prices that are based on the SCF are consistent with the Social Cost of Carbon, and can therefore be consistently applied in cost-benefit analysis or utilized to harmonize the regulation of non-CO2 forcing agents.
Together the four articles contribute to our understanding of land use sector climate policy design.