| Abstract: | ABSTRACT. This paper builds a Faustmann‐based model to study the effects of increased climate‐induced fire risk on the optimal forest rotation period. Simulations using species prevalent in North American forests indicate that both the commercial and socially optimal rotation ages decline as the risk increases. The reduced carbon absorbed by the standing timber can then create a positive feedback effect. This has potentially important policy implications. The Kyoto ratification agreement reached in the autumn of 2001 was dependent on allowing the ‘Umbrella Group’ of countries to use their forests' carbon‐absorbing ability to offset their need for fossil fuel emission reductions. This carbon‐absorbing ability will decline if rotation ages decrease with increased fire risk, weakening the force of the argument for allowing these countries to use their carbon ‘sinks’ to avoid reducing anthropomorphic emissions. |
