Optimal strategy of forestry carbon sink trading under government subsidy based on stochastic differential game of carbon emission reduction

Forestry carbon sequestration is an economical and effective means of 'carbon absorption' at present, which is of great significance to realize China's carbon peaking and carbon neutrality goals. Based on forestry carbon sink trading, a Stackelberg game model between forest enterprises and emission-controlled enterprises was established. Stochastic differential game theory was used to determine the optimal feedback Nash equilibrium strategy of forest enterprises and emission-controlled enterprises with and without government subsidies. The impact of government subsidies on their decision-making behavior and carbon emission reduction was analyzed, and the validity of the model conclusions was verified by numerical examples. It was found that only when the subsidy ratio given to emission-controlled enterprises exceeded a certain value could the government subsidy effectively improve the willingness of the emission-controlled enterprises to purchase forestry carbon sink. In order to improve environmental quality and realize the Pareto optimality of the forestry carbon sink trading system, the value of the proportion of government subsidies to forest enterprises should be within a suitable range, so as to achieve the harmonic development of pollution control effect and economy. The relevant research results could provide guides for the government to formulate subsidy policies and the game players to decide emission reduction strategies in the forestry carbon sink trading system.