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Why only few CDM projects? The case of reforestation projects and remote sensing

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  • Urs Steiner Brandt
  • Gert Tinggaard Svendsen

Abstract

CDM projects have large potentials but also face significant obstacles that have so far limited their applicability. Two serious problems that an effective contracting faces are the presence of private information and the lack of sufficiently precise output measures. In a principal-agent framework, where local landowners are the agents and have private information about their costs, we analyse the implication of being able to condition payments to the agent based on observed output and therefore can offer a differentiated contract. This is compared with a situation where only a uniform payment structure is feasible. In the case of reforestation projects, and with respect to both economic and sustainability criteria, our model point to that a differentiated payment structure based on output due to remote sensing is superior to a uniform contract.

Suggested Citation

  • Urs Steiner Brandt & Gert Tinggaard Svendsen, 2013. "Why only few CDM projects? The case of reforestation projects and remote sensing," International Journal of Global Environmental Issues, Inderscience Enterprises Ltd, vol. 13(1), pages 25-42.
    • Handle: RePEc:ids:ijgenv:v:13:y:2013:i:1:p:25-42
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    Cited by:

    1. Ba, Feng & Liu, Jinlong & Zhu, Ting & Liu, Yonggong & Zhao, Jiacheng, 2020. "CDM forest carbon sequestration projects in western China: An analysis using actor-centered power theory," Forest Policy and Economics, Elsevier, vol. 115(C).

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