Emission Prices, Biomass, and Biodiversity in Tropical Forests

The prudent reforestation of tropical rainforests depends on alternative land uses, the dynamics of carbon accumulation of forest trees, and the implicit social cost of emissions. In this paper, we discuss and extend recent research by Assunção et al. (2023) showing that arguably modest foreign transfers per unit of carbon captured could incentivize substantial reforestation in areas currently used for low-productivity cattle ranching in Brazil. Building on this research, we initiate the study of the relationship between externally set emission prices and changes in biodiversity and biomass. The Amazon holds 10 percent of the world’s vertebrate and plant species. There are more than 15,000 tree species, the vast majority of which are rare. Drawing on the scientific literature on rainforest biodiversity, we provide some preliminary estimates of how carbon pricing could affect biodiversity in the Brazilian Amazon.