Study On Carbon Sink Trade Pricing Mechanism Of China

As the largest emitter of carbon in the world, China is facing greater pressure to reduce emissions. Because of the huge quantity and value, carbon sink trade will bring new opportunities for the development of Chinese forestry. The pricing mechanism is the core of the market mechanism. Researching on this problem will be helpful to the development of China carbon sink trade and pricing mechanism to find a breakthrough and path, to provide theoretical support for the optimization of resource allocation and promoting carbon sink forestry ecological value compensation.The study is based on the review of the research, definition of concepts, analysis of carbon sink attribute and the theory of environmental economics, ecological forestry, emissions trading and price formation. Taking the practice and pricing mechanism of Chinese carbon trade as the starting point, this paper analyzes the factors which can effect and decide the Chinese carbon trade pricing mechanism, such as the estimation of the value of carbon sink, analysis of supply and demand, and comprehensive analysis of other factors. This paper puts forward some suggestions for the optimization of pricing mechanism.I. Carbon sink has the three properties, which include natural, economic and social properties. Correct understanding and handling the relationship between them which can effect and influence each other, is beneficial to increasing carbon sink production, carrying out carbon trade and the reasonable formation of carbon trade pricing mechanism. Analysis of carbon sink attributes, environmental economics theory, and ecological forestry theory can clarify the necessity of developing the trade of carbon sink in the very great degree. Analysis of emissions trading theory can provide reference to development of the carbon sink trade. Analysis of pricing theory can provide theory basis for the formation of carbon trade price.II. By the analysis of Chinese carbon trade development status, we can draw a basic conclusion that Chinese carbon trade has feasibility of developing. By qualitative analysis and quantitative analysis of Chinese carbon sink trade pricing mechanism, status and characteristics, we can clear the price constitution of carbon sink trade, and understand reasons of lacking price power on the international carbon sink trade market.III. By the qualitative analysis on the theory of labor value and the theory of utility value, we can draw a conclusion that the carbon sink is valuable. This paper comparative analyzes on 8 methods of estimating the value of carbon sink. According to the actual situation of China, this paper respectively using "shadow pricing method" and "B-S model of pricing" to price on the China carbon sink asset. Combining national forest inventory data of the latest, this paper estimates the Chinese carbon sink quantity and value by the method of “forest stock volume conversion factor”. The research results shows that carbon sink has an important position in the Chinese economy, and has enormous development potential.IV. By the analysis of the Chinese forest resource endowments, we can find that Chinese forest resources is now into a rapid development stage. The overall and the quality of Chinese forest resources continuously improve. Rapid rise of the forest resources, especially the artificial forest resources, will provide resources support for developing Chinese carbon trade. By the comparative analysis of the willingness and ability of different supply body, this paper believe that forestry station should be able to become the pioneer to carry out carbon trade and become the most important carbon sink supply body. The study also believe that China has comparative advantages on four aspects in the supply of carbon sink trade, such as stable political and economic environment, woodland and forest resources, capital and technology, management and practice. The study finds that serious shortage of demand is a direct cause of China carbon trade getting into trouble. Under the CDM conditions, the reasons of lacking carbon sink demand mainly lies in induced demand, strict demand condition and complex demand program. In the domestic voluntary market, the main cause lies in the lack of hard constraints on demand. By the analysis of other factors, we can find that the price of carbon sink trade will be affected by many factors, such as responsibilities of carbon reduction, difficulties and cost of afforestation, cost and risk on transaction, market forces of supply and demand, operation of international carbon trading market. This also prove that it is difficult to carrying out the carbon trade from the other side.This paper puts some suggestions to optimization of pricing mechanism from the following aspects: optimization of supply and demand, security, timely introduction of futures trading system. Finally, this paper draws some conclusions.