Forest carbon has become a primary focus when addressing climate change, particularly in understanding the importance of the carbon cycle in reducing global greenhouse gas (GHG) emissions. Based on the terms and definition highlighted by the Food and Agriculture Organization (FAO) (2023), forest carbon encompasses the carbon stock derived from five major sources, including:

1) carbon in above-ground biomass
2) carbon in below-ground biomass
3) carbon in dead wood
4) carbon in litter and
5) soil carbon

The highest proportion of carbon stock is found in the soil organic matter (45%), followed by carbon stock in living biomass (44%), while litter and dead wood only contains forest carbon pools at 6% and 4%, respectively (FAO, 2020). As all these carbon sources originate from forest lands, forests play critical roles in capturing carbon dioxide in the atmosphere and storing it within soils and forest biomass.

However, the ecological functions of forests in ensuring the efficiency of the carbon cycle are often threatened by deforestation. It has been estimated that 10 million hectares of forest have been lost worldwide from 2015 to 2020 (FAO, 2020). When deforestation happens, there are conversions of forests to other land uses, and it is often viewed as more economically profitable than forest conservation. It indicates that the ecological functions of forests in the carbon cycle have no economic functions, markets, or economic value.

This situation lends weight to the long-standing perspectives of environmental economics, which endeavours to assign economic values to nonmarketed goods and services from forest ecosystems, such as the carbon cycle (i.e., storage and sequestration of forest carbon). Assigning economic values to the ecological functions of forests in the carbon cycle means creating markets and placing a particular price for reducing carbon dioxide levels in the atmosphere to meet specific emission targets. When there is a carbon price, it illustrates the economic values of the ecological functions of forests in the carbon cycle.

Examining the existing environmental economics studies reveals that the economic damage caused by climate change can be translated into an economic value at a marginal tonne of carbon (C). Based on economic estimations, the carbon price is limited to $50 per tC. However, a price range between $34 to $50 per tC is argued to produce higher estimates for the ecological functions of forests in the carbon cycle (Tol et al., 2000). The existence of these carbon prices suggests that the carbon market exists. Nevertheless, it needs to be regulated to guide the value of carbon and to avoid the decline of the price level to just under $10 per tC (Zhang, 2000).

As such, carbon-trading prices determine the forest's carbon values per hectare (ha). Appraisal by Pearce (2001) on storage and sequestration of forest carbon, based on a very conservative estimate of $10 per tC (at a maximum of 790 ha of forest areas), has revealed carbon values are:

1) more than $2000 per ha when primary forest (i.e., a forest without disturbance from human activities) is converted into agricultural lands (shifting or permanent) and pasture lands

2) ranging from $1220 to $1940 per ha when secondary forests (i.e., forests that previously have been cleared by natural or man-made causes) are converted into agricultural lands (shifting or permanent) and pasture lands

3) ranging from $520 to $1150 per ha when open forest (i.e., forests with moderately tall trees and a reasonably open canopy) is converted into agricultural lands (shifting or permanent) and pasture lands

Compared with secondary and open forests, land conversion involving undisturbed primary forests has the highest carbon values, thus showing that this forest has the greatest economic values in terms of the ecological functions of forests in the carbon cycle. As undisturbed primary forests usually have large and old trees with undisturbed soil, it becomes an ideal condition for accumulating forest carbon stocks comprising high carbon values (Stephenson et al., 2014). Thus, the primary forest has greater mitigation value as trees and other biomass in this forest have significant roles in maintaining the stored carbon stock to avoid emissions to the atmosphere and ensure the sequestration process of CO2 to reduce the atmospheric concentrations (Primary Forest Alliance, 2015). Knowing the values of forest carbon could guide appropriate conservation measures, particularly in land-based solutions to climate change. Observation of the carbon values indicates the reduction in deforestation rate or strictly avoided deforestation and other forest degradation activities could help reduce global warming and address other impacts of climate change.