Study Of Financial Mechanisms For Chinese Carbon Forest Building

Nowadays, the threat from climate change is growing serious and China’s carbon dioxideemission is facing huge international pressure. Energy-saving and emission-reduction havebecome our social responsibility. Forest carbon sinks and carbon forestry are playing proactiveand important roles in coping with climate change and promoting sustainable development.International experience has shown that carbon forestry can reduce emission and remove CO2significantly with low cost. Construction of carbon sink forests has become an important strategicchoice for the sustainable development of China’s forestry.For carbon forestry, the most key issue is the guarantee of capital invested, so the design offinancial mechanisms is the key step and a hard work. Due to the late start, high input, longpayback period and low economic efficiency of carbon forestry, private sectors would not like toinvest in carbon forestry. With the further rigidity of energy-saving and emission-reduction, theresearch on financial mechanisms for carbon forestry is very become more and more urgent.From the analysis of the financing status and problems of China’s carbon forestry, we canconclude that not a single financing channel and financing way can meet the huge capital demandof carbon forestry. In addition to optimize the allocation and improve the efficiency of existingfunds, we also need new and additional financial sources, need innovative financial mechanismsto integrate various financial sources, and need incentive mechanisms to guide the funds fromunsustainable usage to sustainable carbon forest building.This thesis defines the concept of carbon forest, and describes its economics characteristics.On the basis of analyzing the relationship between finance and the developmental level of carbonforest, the present situation and the existing problems, external opportunities and internalcapacities, this thesis uses development economics theory, institutional economics theory, publicproducts theory, externalities theory and foreign countries’ carbon forest financing experience asa guide to construct a "three levels" financial mechanisms for Chinese carbon forestry.This study focuses on the government-supported financial mechanisms, self-organizedprivate financial mechanisms and carbon financial mechanisms. In the study of each specificfinancial mechanisms design, the article explains general principles, analyzes the necessity andfeasibility of implementation and then presents running mechanisms in details for each specificfinancial mechanism.In government-supported financial mechanisms section, the thesis suggests that thegovernment and the forestry sector should strengthen cooperation with multilateral and bilateralgovernments and institutions, and then seek official development assistance actively from them.Central and local governments should also increase their transfer payment and fiscal investment and loan to carbon forestry, and the developed area also have obligations to provide cross transferpayment to poor areas Moreover, the governments have to develop innovative financing methodsand ways to raise funds for carbon forestry. The innovative financing methods can be used bygovernments includes: introduction of a carbon tax, issuing of long-term green governmentbonds, the establishment of forest carbon revolving fund and integration of carbon forest withother environmental and development goals.In self-organized private financial mechanisms section, government should encourage largecompanies which have higher credibility and lucrative assets to be a carbon forest project’sfinancing entities, or encourage the establishment of new carbon forest industry associations asfinancing entities to raise and manage the operating capital. This study suggests that design easier,more attractive financing mechanisms and keep smooth donation roads are the most importantpaths to raise private donations. Specially, this thesis designs round-up method and green lotterysystem for carbon forest projects.In carbon financial mechanism section, this thesis suggest that our government and forestenterprises should pay more attention to international carbon market, and try to build nationalcarbon compensation system, or construct domestic carbon trading markets and permit forestcarbon participate it.In short, when design and establish the financial mechanisms of carbon forestry, we mustnot only take into account the financing effect and social equity, but also consider both thefeasibility and operability. Only in this way can the designed financing mechanisms be a practicalguidance.