Annex 1: Implications of the approaches on the management of forest
resources
The present IPCC default, stock-change, production, and atmospheric-flow approaches all give similar
results for national CO2 emissions inventories when wood is produced and consumed domestically,
although the IPCC default approach does not reflect the long-term storage of carbon in wood products.
If wood is traded, this picture changes. In the atmospheric flow approach, gross emissions from imported
wood appear in the accounts of the importing country. The stock-change and production approaches differ
in that the storage of C in the long-lived wood products traded appears in the consuming country under thestock-change approach, but in the producing country under the production approach.
The amount of roundwood traded globally is a small fraction - less than 5% - of the total global
production. But a substantial proportion of products are imported and exported; these include; sawn
goods (about 30%), plywood and veneer sheets (about 35%), particle board (about 22%), fiberboard3(about 25%) paper and paperboard (about 25%). Global production of roundwood totals 3.4 billion m , of3which a 120 million m of roundwood is traded. This factor may be more important for some specificcountries or for the Parties to specific projects which involve trading of wood products.
The disadvantage of the present IPCC default approach is that it fails to capture the possibility that thecarbon storage in wood products may change with time, although it does report changes in carbon storagein above-ground biomass and soils in the forest. The IPCC default approach also acknowledges thebenefits of using imported wood to displace use of fossil fuels. The atmospheric-flow approach does notprovide this incentive for the displacement of fossil fuels, it only provides an incentive if wood isharvested sustainably, and if this wood is used domestically to displace fossil fuels .
A simple way to differentiate among the four approaches for the allocation of CO2 emissions is to examine
the consequences on the emissions accounts of two hypothetical countries. In Table A1-1, we use 12
simple scenarios to illustrate how emissions are reported when wood products are produced and traded
between these two countries. There are four scenarios each to represent situations when forest issustainably managed, harvested without replacement, or harvested even as forests expand. Note, that forevery scenario the atmospheric flow, stock-change, and production approaches report the same total of net
emissions to the atmosphere; but that these emissions are allocated differently between countries A and B.
Whenever long-lived wood products are produced, the IPCC default approach reports larger net emissions
than do the three approaches that acknowledge carbon-stock changes in wood products. The stock-change
and production approaches give identical results for all scenarios involving short-lived products andbiofuels and differ only when long-lived wood products are traded. The production approach counts theaccumulation of long-lived products in the country where the wood was grown, the stock-change approachin the country where the wood products are in use. Several examples are given below and in Table A1-1
on the implications of approaches on the management of forests:
Sustainable forest management
Case 1: Country A manages its forest with no net carbon stock changes and exports 1 unit of harvested
wood to country B where it is: (case 1.1) burned to produce energy or used as a short-lived product withimmediate oxidation, or (case 1.2) put into long-term storage, so that wood product stocks increase by
0.5 unit (there is an assumed oxidation rate from these stocks of 0.5 units). Country B has no forest.

21

Case 2: Country A manages its forest with no net carbon stock changes and uses 1 unit of harvested wooditself either: (case 2.1) to produce energy or short-lived products with assumed immediate oxidation, or(case 2.2) to produce long-lived products, so that wood product stocks increase by 0.5 unit.
Deforestation
Case 3: Country A harvests its forest without regrowing it (deforestation) and exports 1 unit of harvested
wood to country B where it is: (case 3.1) burned to produce energy or used as a short-lived product withimmediate oxidation, or (case 3.2) put into long-term storage so that wood product stocks increase by
0.5 unit.
Case 4: Country A harvests its forest without regrowing it (deforestation) and uses 1 unit of harvested
wood itself either: (case 4.1) to produce energy or short-lived products with assumed immediate
oxidation, or (case 4.2) to produce long-lived products, so that wood product stocks increase by 0.5 unit.
Afforestation
Case 5: Country A manages and expands its forest with an increase of 1 unit in carbon stock(afforestation) and exports 1 unit of harvested wood to country B where it is: (case 5.1) burned to produce
energy or used as a short-lived product with immediate oxidation, or (case 5.2) put into long-term storage,
so that wood product stocks increase by 0.5 unit.
Case 6: Country A manages and expands its forest with an increase of 1 unit in carbon stock(afforestation) and uses 1 unit itself either: (case 6.1) to produce energy or short-lived products withassumed immediate oxidation or, (case 6.2), to produce long-lived products, so that the wood productstocks increase by 0.5 unit.
The above case studies show how approaches can influence incentives for improved carbon management.
Such incentives can be an important criterion when selecting an approach for GHG accounting. The
implications of the approaches on the management of forest resources are shown in Table A1-2. The
examples in this table are illustrative and may not be comprehensive. They compare the present IPCC,stock-change, production, and atmospheric-flow approaches with respect to the incentives they may
provide for:• preservation of forest carbon stocks;• impact on deforestation;• long-term storage of carbon in wood products;• substitution of fossil fuels with biofuels;• importation and exportation of sustainably grown wood.

22

Stock-change approach

Production approach

Atmospheric-flow approach

000-1-1-1-1+1+1+1+1

1.2

2.1

2.2

3.1

3.2

4.1

4.2

5.1

5.2

6.1

6.2

----

----

00

----

----

00

----

----

0

0+1+1+1+1-1

-1

-1

-1

0

0

0

0+1.5

+1+1+1-0.5-1-1-1+0.5

0

0

0

----

----

+0.5

0

----

----

+0.5

0

----

----

+0.5

0+1.5

+1+1.5+1-0.5

-1

-0.5

-1

+0.5

0+0.5

0+1.5

+1+1+1-0.5-1-0.5

-1

+0.5

0+0.5

0

Negative numbers represent a CO2 source (net emission to the atmosphere)
Positive numbers represent a CO2 sink (net uptake from the atmosphere)

01.1

----

----

00----

----

00

----

----

+00+1.5+1+1.5+1-0.5-1-0.5-1+0.5

0+0.5

0+1.5

+1+2+2-0.5-100+0.5

0+1+1

----

----

-0.5

-1

----

----

-0.5

-1

----

----

-0.5

-1+1.5+1+1.5+1-0.5-1-0.5-1+0.50+0.5

0Case Country A Country B A+B Country A Country B A+B Country A Country B A+B Country A Country B A+B

IPCC default approach

Table A1-1. Country case studies: credits and debits for CO2 emissions with different accounting approaches

23No. Stock change is notcaptured.

Does it provide an incentive forthe long-term storage ofbiomass into wood products?
Does it provide an incentive toswitch from fossil-fuels toimported biofuels?

g:\ipcc\phase2\report12.doc

Does it provide an incentive toswitch from fossil-fuels todomestically-produced biofuels?

Net carbon source isaccounted for in the country
where deforestation occurs.

What is the implication fordeforestation?

Yes.

Net carbon source isaccounted for in the country
where deforestation occurs.

Stock-change approachYes. Decreased carbon
stocks will result in net
emissions in the inventory
and vice versa.

Yes, for domestic wood.
No, for imported wood.

Net carbon source isaccounted for in the country
where deforestation occurs.

Production approachYes. Decreased carbon
stocks will result in net
emissions in the inventory
and vice versa.

Atmospheric-flow approach
In general yes, but does notgive debits for depleted
carbon stocks to the extentthat losses in carbon stocks areexported.
Could promote deforestation.
If wood from deforestation isexported, a carbon source isaccounted for in the importing
but not the exporting country.
Yes.

Yes, harvest can be balanced by regrowth. All three approaches are equivalent for domestically-grown wood. For the flow
approach, an exporting country would benefit by a decrease in national emissions.

Yes. If biofuels are imported,emissions are accounted forin the producing country andnot the consuming country.

24

Yes. If biofuels are
No. Emissions are accounted
Yes. If biofuels areimported, emissions arefor in the consuming country.
imported, emissions areaccounted for in theaccounted for in the(Therefore the importation of
producing country and not
producing country and not
biofuels would not be
the consuming country.
the consuming country.
encouraged.)
Trace gases- This depends on whether trace gas emissions from biofuels are greater or less than those emissions from fossil
fuels. For all these approaches, trace gas emissions are accounted for in the consuming country.

Default IPCC approachYes. Decreased carbon stocks
will result in net emissions inthe inventory and vice versa.

Possible implications
Does it promote conservation offorest carbon stocks ?

Table A1-2 (a). Implications of approaches for estimating the fate of carbon from forest harvesting and wood products on the managementof forest resources

g:\ipcc\phase2\report12.doc

25

Table A1-2 (b): Implications of approaches for estimating the fate of carbon from forest harvesting and wood products on the management of forest
resources (Cont.)
Possible implications
Default IPCC approach
Stock-change approach
Production approach
Atmospheric-flow approach
Does it provide an incentive
Import/export not captured.
Imported wood is treated in theCarbon stocks in imported
Provides no incentive forfor the import and export ofsame way as wood produced
wood are not counted inimports of sustainably-grownwithin the importing country.
the importing country, butwood. The importing country
sustainably-grown wood?
in the exporting country.
is allocated the carbon
Exported wood is treated in theThus, there is lessemissions embodied in imported
same way as if it were used
incentive to import andproducts.
within the exporting country.
more incentive to export
long-lived wood products
Provides incentive to export
than in the IPCC andsustainably-grown wood. The
stock-change approaches.
exporting country is assigned acarbon sink equivalent to theFor short-lived products
carbon embodied in exported
and biofuels, this factor
products.
does not apply.
Does it provide an incentiveNo.
No.
No.
Yes. Importing accounting
entity reports emissions whento trade biofuels between
woody biofuels are burned, but
accounting entities (e.g.
not when other biofuels (e.g.,countries): are woody andstraw) are used.
non-woody biomass treateddifferently?