Modeling economic impacts of climate change on U.S. forests

Abstract

Climate change is expected to modify forest growth. As a result, the forestry sector of the United States could be affected. The primary objective of this study was to examine the economic impacts of climate change on the U.S. forestry sector to develop estimates of the magnitude of climate change benefits and costs in the U.S. forestry sector. Secondarily, this study developed a methodology using a forestry sector model to develop such estimates. A set of possible climate change scenarios was chosen and an existing forest sector model was used to run these scenarios. After analyzing the results, it was concluded that climate change can significantly alter the welfare of the forestry sector; however, the economic implications of climate change vary substantially depending on the assumptions about how climate affects trees. Total welfare impacts range from losses of 162 billion dollars to gains of 136 billion dollars. Because of the broad range of economic impacts, this research identifies the need for further investigation of the impacts of climate change on forest biological dynamics. Also, the impacts on welfare tend to be, larger in the future; depicting an intergenerational problem. Three additional findings are important. First, the management intensity under which producers choose to operate as well as the regional distribution of production are shown to be sensitive to climate change. Producers intensify management intensity when climate-induced productivity is decreased and reduce management when productivity is increased. Production shifts to the North in most scenarios. Second, public cut and Canadian imports were found to affect the economic impacts of climate change on the U.S. forestry sector. Third, the methodology used proved to be valuable in studying the economic impacts of climate change on U.S. forests. The model depicts important economic adjustments to the conditions imposed by climate change. Namely, production levels, price levels, management intensity, and the regional distribution of production vary as climate change modifies the conditions of the market. Any modeling framework conceived to study the economic impacts of climate change on U.S. forests ought to have these features.