Conference Agenda

Payments for ecosystem services (PES) schemes are public or private programs that create incentives for restoration of ecosystems, often involving markets where credits are paid per ecosystem service unit produced. Stacking refers to ecosystem services produced from the same land unit but traded in different markets; this may increase land values while ensuring sustained production of these services by private actors and mitigation of negative impacts from landowners focusing on only one ecosystem service. We study PES stacking for water quantity and carbon sequestration/storage together with timber production, and identify conditions where stacking can achieve conservation goals from landowner and policy perspectives. We develop a forest land value model that extends Hartman (1976) to allow for ecosystem services that are substitutes or complements through time to varying degrees. We apply this model using data from five physiographic regions of Virginia together with carbon sequestration and water production data to explore the effects of stacking PES on optimal forest rotation ages and land expectation values under different conditions where the two ecosystem services may be substitutes (i.e. higher carbon storage leads to lower water yield) or complements depending on where land is located. We find stacking PES for water and carbon sequestration generates higher land values and shorter optimal rotation ages when landscape and forest conditions involve ecosystem services that are substitutes. When the ecosystem services are complements, stacking payments generates longer optimal rotation ages and can lower land values and timber production, thereby disincentivizing landowners.