Reforestation Policy under Carbon Taxation: Climate Efficacy, Biodiversity, and Macro-Financial Risks
Abstract
This paper presents a global stock-flow consistent (SFC) macroeconomic model that couples climate damages with an explicit forestry module to examine how carbon pricing and reforestation policies interact to shape climate outcomes and financial stability. Built on a Goodwin-Keen framework, the model endogenizes underemployment, income distribution, inflation, and private debt, and tracks biome-specific biomass, harvesting, and sequestration, adding a biodiversity-relevant dimension. Baseline (no/low/high damage) counterfactuals are contrasted with convex carbon-tax schedules and linearly phased reforestation controls of varying intensity. Simulations to 2100 show strong policy interactions: carbon taxes curb fossil emissions but, by stimulating biomass substitution, can attenuate reforestation gains unless forest controls are sufficiently ambitious; reforestation expands stocks and sequestration yet raises implementation costs and private-debt burdens, reinforcing long-run deflationary pressures. By jointly evaluating climate efficacy and macro-financial risks, the framework clarifies trade-offs and complementarities in the design of carbon and forest policies.
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BibTeX
@misc{bordenave2026reforestation,
title = {{Reforestation Policy under Carbon Taxation: Climate Efficacy, Biodiversity, and Macro-Financial Risks}},
author = {Matthieu Bordenave},
howpublished = {HAL},
year = {2026},
month = sep,
url = {https://hal.science/hal-05754509v1},
note = {CC BY-NC-ND 4.0},
}
RIS
TY - UNPB
TI - Reforestation Policy under Carbon Taxation: Climate Efficacy, Biodiversity, and Macro-Financial Risks
AU - Matthieu Bordenave
PY - 2026
DA - 2026/09/18
PB - HAL
UR - https://hal.science/hal-05754509v1
AB - This paper presents a global stock-flow consistent (SFC) macroeconomic model that couples climate damages with an explicit forestry module to examine how carbon pricing and reforestation policies interact to shape climate outcomes and financial stability. Built on a Goodwin-Keen framework, the model endogenizes underemployment, income distribution, inflation, and private debt, and tracks biome-specific biomass, harvesting, and sequestration, adding a biodiversity-relevant dimension. Baseline (no/low/high damage) counterfactuals are contrasted with convex carbon-tax schedules and linearly phased reforestation controls of varying intensity. Simulations to 2100 show strong policy interactions: carbon taxes curb fossil emissions but, by stimulating biomass substitution, can attenuate reforestation gains unless forest controls are sufficiently ambitious; reforestation expands stocks and sequestration yet raises implementation costs and private-debt burdens, reinforcing long-run deflationary pressures. By jointly evaluating climate efficacy and macro-financial risks, the framework clarifies trade-offs and complementarities in the design of carbon and forest policies.
ER -