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Abstract
Discussions regarding the efficiency of climate change mitigation efforts are predicated on
future costs and benefits and thus heavily influenced by discounting. One such regime, dual
discounting, involves discounting carbon values differently from non-carbon values; the
argument being that environmental values are becoming scarcer and thus should not be subject
to regular discounting. Previous stand-level analyses show that discounting carbon with a lower
rate than non-carbon values improves the profitability of forest-based climate change mitigation
projects such as afforestation. We challenge this result for cases where the forest has initial
carbon stock. Using the national forest inventories of Norway and a partial, spatial equilibrium
model of the Norwegian forest sector, we find that discounting carbon less than non-carbon
values increases harvest and consequently decreases carbon sequestration in the short term.
Lowering the carbon discount rate leads to more investments in forestry and thereby
substantially higher long-term climate change mitigation efforts.