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Emissions trading schemes are increasingly being§adopted to combat climate change. New Zealand created§the world s first all sectors all gases such scheme§in 2008, awarding tradable credits for carbon§sequestration and imposing liabilities for emissions§(i.e. harvest or deforestation) from forestry. Adding§carbon pricing as a decision variable complicates§forest and forest land valuation, highlighting the§real options available to foresters (i.e. to defer§harvest or to change land use). Standard forest§valuation methodologies do not properly capture the§value impacts of carbon pricing on forestry. This§book was commissioned by the New Zealand Ministry of§Agriculture and Forestry, and develops a new approach bootstrapping real options analysis (BROA) to§address this shortcoming. The BROA approach is rich§enough to capture the complexities of forest§valuation under carbon pricing, while remaining§tractable enough to find practical application. It§should be useful to academics interested in valuing§complex real options, as well as to academics,§practitioners and policymakers interested in§evaluating the impact of carbon pricing on forestry§and forest land use.
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