  This paper considers the optimal rotation of forests when the carbon flows of
forest growth and harvest are priced with an increasing price. Such an
evolution of carbon price is generally associated with economically efficient
climate change mitigation, and would provide incentives for the land-owner for
enhanced carbon sequestration. With an infinitely long sequence of even-aged
forest rotations, the optimal harvest age changes with subsequent rotations due
to the changing carbon price. The first-order optimality conditions therefore
also involve an infinite chain of lengths for consecutive forest rotations, and
allow the approximation of the infinite-time problem with a truncated series of
forest rotations.
  Illustrative numerical calculations show that when starting from bare land,
the initial carbon price and its growth rate both primarily increase the length
of the first rotation. With some combinations of the carbon pricing parameters,
the optimal harvest age can be several hundred years if the forest carbon is
released to the atmosphere upon harvest. This effect is not, however, entirely
monotonous. Consequently, the currently optimal harvest ages are generally
lower with higher rates of carbon price increase. This creates an interesting
temporal aspect, suggesting that the supply of wood and carbon sequestration by
forests can change considerably during subsequent rotations under an increasing
price on carbon.
