The land use change time-accounting failure

Land use change (LUC) is the second largest human-induced source of greenhousegases. While LUC impacts are mostly immediate, policy makers consider it to be evenlyspread over time. In the context of public evaluation of projects, I theoretically show that,as long as the discounting process perfectly offsets the rise of carbon prices, cost-benefitanalysis outcomes are not affected. When this condition does not hold, which is particularto the global warming issue, the uniform time-accounting of LUC distorts present valuesby emphasizing both the discounting process and the increase in the carbon price over time.This induced bias is quantified in a case study of bioethanol in France. Depending on thetype of impact and discounting and carbon pricing assumptions, a downward/upward biasbetween ±15% and ±30% of the LUC value is found. Two simple decision tools are pro-vided to improve accounting of LUC impacts.