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Transaction and abatement costs of carbon-sink projects in developing countries

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  • CACHO, OSCAR J.
  • MARSHALL, GRAHAM R.
  • MILNE, MARY

Abstract

Projects in the forestry sector, and land-use change and forestry projects more generally, have the potential to help mitigate global warming by acting as sinks for greenhouse gasses, particularly CO2. However, concerns have been expressed that participation in carbon-sink projects may be constrained by high costs. This problem may be particularly severe for projects involving smallholders in developing countries. Of particular concern are the transaction costs incurred in developing projects, measuring, certifying, and selling the carbon-sequestration services generated by such projects. This paper addresses these issues by reviewing the implications of transaction and abatement costs in carbon-sequestration projects. An approach to estimating abatement costs is demonstrated through four case studies of agroforestry systems located in Sumatra, Indonesia. A typology of transaction costs is presented and related to existing pilot projects. The paper concludes with recommendations to reduce the disadvantages that smallholders may face in capturing the opportunities offered by carbon markets.

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Bibliographic Info

Article provided by Cambridge University Press in its journal Environment and Development Economics.

Volume (Year): 10 (2005)
Issue (Month): 05 (October)
Pages: 597-614

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Handle: RePEc:cup:endeec:v:10:y:2005:i:05:p:597-614_00

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Cited by:
  1. Oscar Cacho & Leslie Lipper, 2007. "Abatement and Transaction Costs of Carbon-Sink Projects Involving Smallholders," Working Papers, Fondazione Eni Enrico Mattei 2007.27, Fondazione Eni Enrico Mattei.
  2. Cacho, Oscar J. & Lipper, Leslie & Moss, Jonathan, 2013. "Transaction costs of carbon offset projects: A comparative study," Ecological Economics, Elsevier, Elsevier, vol. 88(C), pages 232-243.
  3. Skidmore, Samuel & Santos, Paulo & Leimona, Beria, 2012. "Seeing REDD: A Microeconomic Analysis of Carbon Sequestration in Indonesia," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil, International Association of Agricultural Economists 126688, International Association of Agricultural Economists.
  4. Russell Wise & Graham Maltitz & Robert Scholes & Chris Elphinstone & Renee Koen, 2009. "Estimating carbon in savanna ecosystems: rational distribution of effort," Mitigation and Adaptation Strategies for Global Change, Springer, Springer, vol. 14(7), pages 579-604, October.
  5. repec:ags:aare05:139338 is not listed on IDEAS
  6. Emily Anderson & Hisham Zerriffi, 2012. "Seeing the trees for the carbon: agroforestry for development and carbon mitigation," Climatic Change, Springer, Springer, vol. 115(3), pages 741-757, December.
  7. Wunder, Sven & Engel, Stefanie & Pagiola, Stefano, 2008. "Taking stock: A comparative analysis of payments for environmental services programs in developed and developing countries," Ecological Economics, Elsevier, Elsevier, vol. 65(4), pages 834-852, May.
  8. Cerbu, Gillian A. & Sonwa, Denis J. & Pokorny, Benno, 2013. "Opportunities for and capacity barriers to the implementation of REDD+ projects with smallholder farmers: Case study of Awae and Akok, Centre and South Regions, Cameroon," Forest Policy and Economics, Elsevier, Elsevier, vol. 36(C), pages 60-70.
  9. Wise, Russell M. & Cacho, Oscar J., 2008. "Bioeconomic meta-modelling of Indonesian agroforests as carbon sinks," 2008 Conference (52nd), February 5-8, 2008, Canberra, Australia, Australian Agricultural and Resource Economics Society 6772, Australian Agricultural and Resource Economics Society.
  10. Nigel Key & Gregoire Tallard, 2012. "Mitigating methane emissions from livestock: a global analysis of sectoral policies," Climatic Change, Springer, Springer, vol. 112(2), pages 387-414, May.
  11. Wise, Russell M. & Cacho, Oscar J., 2003. "Tree-crop interactions and their environmental and economic implications in the presence of carbon-sequestration payments," 2003 Conference (47th), February 12-14, 2003, Fremantle, Australia, Australian Agricultural and Resource Economics Society 58271, Australian Agricultural and Resource Economics Society.
  12. Larson, Donald F. & Dinar, Ariel & Blankespoor, Brian, 2012. "Aligning climate change mitigation and agricultural policies in Eastern Europe and Central Asia," Policy Research Working Paper Series 6080, The World Bank.
  13. Lele, Sharachchandra & Srinivasan, Veena, 2013. "Disaggregated economic impact analysis incorporating ecological and social trade-offs and techno-institutional context: A case from the Western Ghats of India," Ecological Economics, Elsevier, Elsevier, vol. 91(C), pages 98-112.
  14. Marenya, Paswel Phiri & Nkonya, Ephraim M. & Xiong, Wei & Rossel, Jose Deustua & Edward, Kato, 2012. "Which would work better for improved soil fertility management in sub-Saharan Africa: Fertilizer Subsidies or Carbon Credits?," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil, International Association of Agricultural Economists 126904, International Association of Agricultural Economists.
  15. Cacho, Oscar J., 2008. "Carbon markets, transaction costs and bioenergy," 2008 Conference (52nd), February 5-8, 2008, Canberra, Australia, Australian Agricultural and Resource Economics Society 6007, Australian Agricultural and Resource Economics Society.

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