Avoiding global deforestation by taxing land in agricultural production: the implications for global markets

Abstract

The projected growth in population and incomes is expected to create pressure to convert forestland into farmland. At the same time, the increasingly negative climate impacts are expected to generate further pressure to enhance the terrestrial carbon sink. Even though these goals are incompatible as reversing the deforestation trend by afforesting cropland would result in negative market impacts such as higher food prices, using the GTAP and GTM models, we find that these impacts would be relatively small if the goal of preserving 144.2 million hectares of forestland that otherwise would be converted to agricultural land by 2033 is achieved through a tax on land use in agricultural production. As to the economic price for doing so, the avoided deforestation would in most regions of the world result in less agricultural output and higher market prices. This is estimated to impact the well-being of global consumers by $119.7 billion, which translates to a global average cost of $13.78 per person in 2033.