An economic analysis of the potential for carbon sequestration by forests:: evidence from southern Mexico

Forestry has been proposed as a means to reduce net greenhouse gas emissions, by either reducing sources or enhancing sinks. This study assesses the potential of an incentive-based program to stimulate small farmers and communities to adopt biomass accumulating measures such as agroforestry or improved forest management. Current vegetation type, land use and stocks of carbon were assessed for an area of around 600 000 ha in southern Mexico, and the carbon (C) sequestration potential of a number of alternative techniques, based on farmers' preferences, was estimated. Cost and benefit flows in US $ per Megagram (= 10(6) g) of carbon (MgC) of each current and alternative system were developed. A model was designed to calculate the expected response to financial incentives of between US SO and $40 per MgC sequestered. The most cost-effective method for sequestering carbon appears to be the improved management of natural forest on communal lands. We estimated that 38 x 10(6) MgC could be sequestered for under US $15 MgC-1, of which 32 x 10(6) MgC through forest management. The choice of a baseline rate of biomass loss under a 'business-as-usual' scenario remains a critical issue for estimates of the cost-effectiveness of carbon sequestration by forestry. (C) 2000 Elsevier Science B.V. All rights reserved.