This project 1) translates certain recently determined biological and economic consequences of climate change on the southeastern US region's forests and timber markets into regional policy outcomes (employment, price, and output in various economic sectors), and 2) studies the micro (i.e. sector level) and macro economic impacts of some carbon tax/credit mitigation strategies on the regional economy. The Southeastern regional Economic Model (SEREM) has been developed that allows for direct correlation between climate change consequences and economic impact within the region.

Forests, one of the main assets of the region, provide timber and other inputs to the other sectors of the regional economy (e.g. manufacturing and construction) and services (e.g. hunting, recreation, and clean water). Other benefits of forests to society include their role as major carbon sinks. Forest-related sectors of the regional economy provide employment and tax revenues and use other sectors' output as input ion their production activities. Forests are also very sensitive to significant climate change, hence the need to fully understand climate change consequences on the region's forests.

Hadley II climate change impacts on southeastern U.S. forests reduce real gross regional product (GRP) by 0.015 percent but a more stringent climate change scenario (Hadley +2 degrees rise in temperature and -20% precipitation reduces GRP by 0.1 percent. Stabilizing CO₂  emissions at year 2000 levels with a carbon tax reduces GRP by 0.32 percent, 20 times the GRP loss but raises enough revenue to cover just 7 times the GRP loss for Hadley II climate change impacts on the region's forests II. Providing indirect business tax relief is the best strategy among several for recycling the carbon tax revenue.