Year of Publication

2014

Degree Name

Master of Science (MS)

Document Type

Master's Thesis

College

Agriculture, Food and Environment

Department

Agricultural Economics

First Advisor

Dr. G. Andrew Stainback

Abstract

Internalizing carbon value for forest landowners has the potential to increase carbon supply in forest and mitigate CO2 in the atmosphere. In this study, we developed a modified Hartman model to investigate how payments of carbon offsets impact the optimal management of hardwood forests in Kentucky under condition of catastrophic events. Different carbon markets were modeled and several sensitivity analyses were performed to examine varied management strategies to achieve maximized financial return or highest environmental benefits. Furthermore, another model was developed to incorporate the impact of risk aversion to price uncertainty using E-V model. We were able to identify the most favorable scenarios for landowners and society in the face of price variability and catastrophic risk.

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