Project Report:
Forest Carbon Tax and Reward
Clearcutting is the number one source of carbon emissions in many states yet is virtually unregulated.

- Investigates the causes of economic imbalances.
- Investigates causes tending to destroy or impair the free-market system.
- Explores and develops market-based solutions.


Center for Sustainable Economy and its partners are advocating for state-level forest carbon tax and reward programs as a way to dis-incentivize high-emissions logging operations and dramatically scale up beneficial practices that result in continuous increases in carbon storage. Industrial logging activities are the number one source of greenhouse gas emissions in Oregon and many other states yet, to date, climate action plans and policies exclude this sector. A forest carbon tax and reward program is a market based solution for folding this sector in to state climate agendas in an efficient, effective manner.


Oregon can lead the way in addressing this aspect of the climate crisis by passing globally replicable forest carbon tax and reward legislation, now under consideration by lawmakers. Such a program would disincentivize clearcutting, chemical sprays, short rotations and construction of logging roads – practices that come with a high carbon footprint – and dramatically scale up climate smart forest practices that enhance carbon sequestration and storage capacity of its state and privately managed forestlands.

Here’s how it would work: Forestland owners who release more carbon through logging than is sequestered by natural forests on their properties would be levied a tax equivalent to the social cost of carbon – currently $42 per ton of carbon dioxide emitted – on these net emissions. However, forestland owners would receive credits against the levy for a wide range of beneficial practices that bolster carbon storage including long rotations, selective harvesting and set-asides for streams, wildlife, non-timber forest products, recreation, and other beneficial uses. In addition, forestland owners that embrace these practices would be eligible for generous payments from a Forest Carbon Incentive Fund, capitalized by the forest carbon tax and managed by the Department of Forestry in consultation with the Oregon Global Warming Commission. Many forestland owners would make money on this deal – in particular, good actors who know how to produce timber while leaving a real forest behind.

The revenue impacts of the proposed legislation have yet to be calculated. But a reasonable estimate is that the net tax (after credits and deductions) would generate $50 per thousand board foot harvested – equivalent to $120 million per year at current rates of harvest on industrial forestlands. Oregon’s Department of Forestry and the Oregon Global Warming Commission would keep what they need to fill in their budget holes and administer the tax and reward program. The rest (about $100 million) gets dispersed to forestland owners who agree to implement climate-smart, labor-intensive practices needed to boost carbon storage and transform Oregon’s private forest landscape from a veritable wasteland of clearcuts and logging roads into a green carpet of healthy, carbon rich forests. If managed well, Pacific Northwest forests have the potential to capture and store more carbon per acre than any other forest type on the planet. A forest carbon tax and reward program would help fulfill this potential and by doing so, create thousands of new jobs.

For every million dollars invested in the woods paying workers to restore timber plantations back to biodiverse forests and implementing other climate smart practices we would see about 60 direct and induced jobs. That’s 6,000 jobs associated with incentive payments of about $100 million per year, which would be a welcome shot in the arm for distressed rural communities searching for ways to decouple from the booms and busts of industrial, high emissions logging cycles.

Time is running out on the climate time bomb. One of the great contributions Oregon can make on the global stage is to recruit its state and privately held forestlands into its climate agenda, help restore the world’s most effective carbon sink, and create thousands of jobs in doing so. The Oregon Legislature and Governor Brown would do well to provide such leadership by adopting a forest carbon tax and reward program this year.


Climate change has been referred to as the most spectacular market failure ever. The market’s failure to incorporate the costs of climate change into prices for fossil fuels or wood and paper products supports a tremendous level of over-production, over-consumption, and wasteful use of these commodities. Putting a price on high-emissions logging operations is a critical market-based solution for internalizing the catastrophic costs associated with climate change and rebalancing markets to support efficient use of forestlands and wood products.


CSE has pioneered the world’s first-ever forest carbon tax and reward program concept, which is now being considered in Oregon. The model program we developed is applicable to any region of the country or world where deforestation, forest degradation, and unsustainable forest practices are prevalent. In 2017 and 2018, we will work with public officials and partners in Oregon and other states to promote this approach.

Information Dissemination

CSE is disseminating the forest carbon tax and reward program concept and technical analysis behind it nationally to NGOs, legislators, state foresters and climate scientists as a multi-state solution. We have presented the concept at conferences and briefings with key decision makers, and continue to use our website and social media to boost uptake.

Project Link

Amount Approved
$53,000.00 on 6/3/2017 (Check sent: 6/14/2017)



Dr. John Talberth
President and Senior Economist, Center for Sustainable Economy

Posted 3/8/2017 5:20 PM
Updated   9/5/2017 3:16 PM

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