Explaining The Price Of Voluntary Carbon Offsets
AbstractThis paper identifies factors that explain the large variability in the price of voluntary carbon offsets. We estimate hedonic price functions using a variety of provider- and project-level characteristics as explanatory variables. We find that providers located in Europe sell offsets at prices that are approximately 30% higher than providers located in either North America or Australasia. Contrary to what one might expect, offset prices are generally higher, by roughly 20%, when projects are located in developing or least-developed nations. But this result does not hold for forestry-based projects. We find evidence that forestry-based offsets sell at lower prices, and the result is particularly strong when projects are located in developing or least-developed nations. Offsets that are certified under the Clean Development Mechanism or the Gold Standard, and therefore qualify for emission reductions under the Kyoto Protocol, sell at a premium of more than 30%; however, third-party certification from the Voluntary Carbon Standard, one of the popular certifiers, is associated with a price discount. Variables that have no effect on offset prices are the number of projects that a provider manages and a provider's status as for-profit or not-for-profit.
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Bibliographic InfoArticle provided by World Scientific Publishing Co. Pte. Ltd. in its journal Climate Change Economics.
Volume (Year): 01 (2010)
Issue (Month): 02 ()
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Web page: http://www.worldscinet.com/cce/cce.shtml
Other versions of this item:
- Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
- Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
- Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
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