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PAPER D6 - The Effects of Carbon Payment on Optimal Rotation of Gmelina Forest: Case Study in Tasikmalaya and
Banjar, West Java
Yonky Indrajaya
1
, M. Siarudin
1 1
Agroforestry Technology Research Institute, Jl. Raya Ciamis-Banjar km 4, Ciamis 4620 Corresponding Email: yonky_indrajayayahoo.com
ABSTRACT
Forests may play an important role in climate change mitigation by sequestering carbon from the atmosphere. One of the methods for sequestering more carbon in the forest management
is by extending age of forest rotation. This study aims to analyze the effects of carbon payment on optimal rotation age of gmelina Gmelina arborea Roxb. forest in Tasikmalaya and
Banjar, West Java. The method used in this study is stylized Faustmann model with additional income from carbon payment. The additionally of carbon uptake is calculated by Verified
Carbon Standard VCS model, one of the most well-known standards in voluntary carbon market. Under VCS, the total amount of carbon that can be credited is the average amount of
carbon stored in one forest rotation. The results of this study showed that 1 considering only timber for the income, the Faustmann optimal rotation is 10 year and 2 the additional
income from carbon payment under VCS will lengthen the optimal rotation age. Keywords: gmelina, optimal rotation, carbon payment, West Java
1. INTRODUCTION
Forests may play an important role in climate change mitigation by sequestering carbon from the atmosphere. One of the methods for sequestering more carbon in the forest management
is by extending the rotation age Foley Galik, 2009; Richards Stokes, 2004 which is recognized under Reducing Emission from Deforestation and forest DegradationREDD+
mechanism. The additional carbon stored in forest biomass from extending forest rotation differs from afforestation or reforestation project under Clean Development Mechanism
CDM. This paper aims to analyse the effects of carbon payment on optimal rotation of gmelina stand
in Eastern part of West Java Province case study in Banjar and Tasikmalaya Districts. One of the payment schemes that can compensate the additional amount of carbon stored against the
baseline by extending rotation age existed in the market, that is Verified Carbon StandardVCS VCS, 2013. Under VCS rule, the maximum amount of carbon that can be
credited is the difference amount of the average amount of carbon stored in biomass in the project with the average amount of carbon stored in biomass in the baseline VCS, 2011.
The effects of carbon price on optimal rotation in plantation forest have been intensively studied in the Northern Hemisphere Asante Armstrong, 2012; Foley Galik, 2009;
Köthke Dieter, 2010; Susaeta, Chang, Carter, Lal, 2014; van Kooten, Binkley, Delcourt, 1995. Some studies have also been conducted in the tropics Galinato Uchida,
2011; Olschewski Benitez, 2010; Tassone, Wesseler, Nesci, 2004. In Indonesia, the
Bogor, 21-22 October 2015
370 activities of the plantation forest for carbon sequestration are relatively new topics; therefore
the research is still limited, compared to those in Europe and US.
2. METHOD
The method used in this study is profit maximization using stylized Faustmann formula with the additional income from carbon payment. Faustmann model is a model that is widely used
in profit maximization in forestry mostly for plantation forest Chang, 2001 because the model proved to be the most plausible model in forest economics Samuelson, 1976. If we
denote p as wood price net harvesting costs per m
3
, K represents plantation costs, ST is the volume of the gmelina stand, and r is the real interest rate, the NPV of wood in infinite time
horizon looks as follows: 1
Let’s denote p
c
as the price of per ton CO
2
eq., and the amount of carbon stored in tree biomass that can be credited is denoted as C , the NPV of carbon over infinite time horizon
is:
∑
2 Therefore, the maximum profit from joint production of wood and carbon is:
∑
3 Starting at year where
̅
baseline
, and the payment will be stopped when ∑
̅ . The
baseline used in this study is the average amount of carbon stored in above ground biomass of gmelina forest in one rotation i.e. Faustmann rotation. The amount of carbon stored in
above ground biomass at time , is estimated by allometric equation of Chave et al.
2005: [
] 4
Where represents wood density in kgm
3
of gmelina i.e. 0.45, and D is the tree diameter breast height at time
. The diameter at breast height, the height, and the population of gmelina trees in one ha are estimated based on previous study by Indrajaya 2015 see
Appendix 1. The proportion of carbon in tree biomass is 0.47 IPCC, 2006. The amount of CO
2
eq. is calculated by multiplying the C-stored in trees with 4412, the molecular mass number of carbon in CO
2
. The economic data are taken from Indrajaya 2015. Plantation costs are estimated of IDR 15
million, the price of wood is IDR 0.5 million per m
3
, and the harvesting costs is IDR 0.05 million. The real interest rate used in this study is 4 regarding the average rate of real interest
rate in Indonesia from 2003 – 2013 World Bank, 2013.
3. RESULT AND DISCUSSION
