Carbon and Biodiversity Policies

Wildfires are a concern in many European countries, and they might occur more frequently given climate change. Carbon sequestration is an ecosystem service provided by forests that is affected by fires and is neglected in traditional markets. Recently, the European Union (EU) has created environmental policies that address climate change, wildfires, and biodiversity conservation through payment for ecosystem services schemes. This study aims to estimate the monetary carbon savings of avoiding wildfires in five Mediterranean countries using historical wildfire emissions data and the auction prices in the EU Carbon Market. Portugal is further studied since the country has a new ecosystem services payment policy. The results indicate that, by avoiding fires, the countries could have annual benefits in the order of millions of euros. For Portugal, the value of the policy incentive is inferior to the value of the carbon sequestration service provided by avoiding fires and could be reexamined.