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How big is leakage from forestry carbon credits? Estimates from a Global Model

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  • Acosta, Montserrat
  • Sohngen, Brent
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    Abstract

    There is widespread recognition that forestry carbon credits can reduce the net emissions of carbon into the atmosphere. Designing systems to sequester carbon, however, has proven difficult due to a number of efficiency issues, including leakage. Leakage occurs when policy makers develop carbon projects in specific places which protect some parcels of land, but leave other parcels of land unprotected. This analysis uses a newly developed model of global land use change from an established forestry and land use model, described in Sohngen et al. (1999); Sohngen and Mendelsohn (2003); and Kindermann et al. (2008). To assess leakage we estimate carbon under storage under one scenario where the world is awarded carbon credits and another where tropical developing nations are awarded the credits. We focus our results on several regions, namely Brazil, the rest of South America, Sub-Saharan Africa and Southeast Asia. Carbon prices are assumed to be constant, and range from US$0 tC to US$900 tC. The model adjusts global land uses to these specific policies, and leakage is assessed by comparing carbon gains within the project areas to net global changes in carbon. A number of policy relevant results emerge. First, the estimates indicate that leakage ranges from 2% to more than 14%. Second, as carbon credits increase, leakage decreases across the world.

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    Bibliographic Info

    Paper provided by Agricultural and Applied Economics Association in its series 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin with number 49468.

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    Date of creation: 2009
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    Handle: RePEc:ags:aaea09:49468

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    Keywords: Carbon Sequestration; Leakage; Carbon Credits; Environmental Economics and Policy; Land Economics/Use;

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    1. Bellassen, Valentin & Gitz, Vincent, 2008. "Reducing Emissions from Deforestation and Degradation in Cameroon -- Assessing costs and benefits," Ecological Economics, Elsevier, vol. 68(1-2), pages 336-344, December.
    2. Brent Sohngen & Robert Mendelsohn, 2003. "An Optimal Control Model of Forest Carbon Sequestration," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(2), pages 448-457.
    3. Brian C. Murray & Bruce A. McCarl & Heng-Chi Lee, 2004. "Estimating Leakage from Forest Carbon Sequestration Programs," UWO Department of Economics Working Papers 20043, University of Western Ontario, Department of Economics, revised Mar 2003.
    4. Hertel, Thomas & Lee, Huey-Lin & Rose, Steven & Sohngen, Brent, 2006. "The Role of Global Land Use in Determining Greenhouse Gases Mitigation Costs," GTAP Working Papers 2230, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
    5. N. Wear, David & Murray, Brian C., 2004. "Federal timber restrictions, interregional spillovers, and the impact on US softwood markets," Journal of Environmental Economics and Management, Elsevier, vol. 47(2), pages 307-330, March.
    6. Tavoni, Massimo & Sohngen, Brent & Bosetti, Valentina, 2007. "Forestry and the carbon market response to stabilize climate," Energy Policy, Elsevier, vol. 35(11), pages 5346-5353, November.
    7. Adam J. Daigneault & Mario J. Miranda & Brent Sohngen, 2010. "Optimal Forest Management with Carbon Sequestration Credits and Endogenous Fire Risk," Land Economics, University of Wisconsin Press, vol. 86(1), pages 155-172.
    8. Sedjo, Roger, 1999. "Potential for Carbon Forest Plantation in Marginal Timber Forests: The Case of Patagonia, Argentina," Discussion Papers dp-99-27, Resources For the Future.
    9. Brent Sohngen & Robert Mendelsohn & Roger Sedjo, 1999. "Forest Management, Conservation, and Global Timber Markets," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(1), pages 1-13.
    10. Lee, Huey-Lin & Thomas Hertel & Brent Sohngen & Navin Ramankutty, 2005. "Towards An Integrated Land Use Database for Assessing the Potential for Greenhouse Gas Mitigation," GTAP Technical Papers 1900, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
    11. Gan, Jianbang & McCarl, Bruce A., 2007. "Measuring transnational leakage of forest conservation," Ecological Economics, Elsevier, vol. 64(2), pages 423-432, December.
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