Emission Trading Systems and Forestry: Understanding the Case of New Zealand and Applications for Sweden through the EU ETS

Abstract: Forest carbon sinks are becoming increasingly important as a climate change mitigation tool. To date, New Zealand is the only country that has fully incorporated forestry into its emission trading framework. This study seeks to understand if and how that has impacted forest management practices and carbon sink enhancement. Furthermore, this study seeks to understand to what extent the practices in New Zealand could be useful for improving Sweden's forest carbon sinks by studying the European Emission Trading System. As Sweden is one of the most forested countries in Europe, understanding global, regional and national policy development related to forestry is essential to enhance Sweden's carbon sinks and reach national climate targets. This study uses quantitative regression analysis and descriptive statistics to study the relationship between the price of New Zealand carbon units and forest management practices. Findings from the research demonstrates some relation between carbon sink enhancement and price of NZU. Therefore, if New Zealand’s emission trading system had been applied solely to the case of Sweden it is possible that it would enhance Sweden’s carbon sinks. However, on an EU level, as the region consists of multiple member states which are vastly different, another type of study would have to be conducted.