Forest owner in a developing country claims that he earns

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Reference no: EM1310527

Q. A forest owner in a developing country claims that he earns more m1y with carbon sequestration than with timber production. Conclude the revenues of a carbon sink project based on the following information. The project duration is 30 years. Temporary credits are issued after carbon has been sequestered with an expiring time of 5 years. Carbon sequestration is assumed to be 45 tons CO2 until year 5, additional 75 tons until year 10, 115 tons until year 15, 95 tons until year 20, also 75 tons until year 25, respectively. The price of permanent emission reduction certificates is US$ 25 also the interest rate in ANNEX 1 countries is 2%. Assume that the present value of timber production is US$ 1300 also the interest rate in developing country is 4%. Is the forest owner right?

Reference no: EM1310527

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