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Abatement and Transaction Costs of Carbon-Sink Projects Involving Smallholders

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Author Info
Oscar Cacho (University of New England)
Leslie Lipper (Food and Agriculture Organization)
Abstract

Agroforestry projects have the potential to help mitigate global warming by acting as sinks for greenhouse gasses. However, 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 analysing the implications of transaction and abatement costs in carbon-sequestration projects. A model of project participation is developed, which accounts for the conditions under which both buyers and sellers would be willing to engage in a carbon transaction that involves a long-term commitment. The model is used to identify critical project-design variables (minimum project size, farm price of carbon, minimum area of participating farms). A project feasibility frontier (PFF) is derived, which shows the minimum project size that is feasible for any given market price of carbon. The PFF is used to analyse how the transaction costs imposed by the Clean Development Mechanism of the Kyoto Protocol affect project feasibility.

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Paper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2007.27.

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Date of creation: Mar 2007
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Handle: RePEc:fem:femwpa:2007.27

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Related research
Keywords: Agroforestry; Climate Policy; Carbon Sequestration Costs;

Find related papers by JEL classification:
Q23 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Forestry
Q57 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Ecological Economics
O1 - Economic Development, Technological Change, and Growth - - Economic Development
O13 - Economic Development, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Cacho, Oscar J. & Marshall, Graham R. & Milne, Mary, 2005. "Transaction and abatement costs of carbon-sink projects in developing countries," Environment and Development Economics, Cambridge University Press, vol. 10(05), pages 597-614, October. [Downloadable!]
  2. Oscar J. Cacho & Graham R. Marshall & Mary Milne, 2003. "Smallholder Agroforestry Projects: Potential for carbon sequestration and poverty alleviation," Working Papers 03-06, Agricultural and Development Economics Division of the Food and Agriculture Organization of the United Nations (FAO - ESA). [Downloadable!]
  3. Leslie Lipper & Romina Cavatassi, 2003. "Land Use Change, Carbon Sequestration and Poverty Alleviation," Working Papers 03-13, Agricultural and Development Economics Division of the Food and Agriculture Organization of the United Nations (FAO - ESA). [Downloadable!]
  4. Oscar Cacho & Russell Wise & Kenneth MacDicken, 2004. "Carbon Monitoring Costs and their Effect on Incentives to Sequester Carbon through Forestry," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 9(3), pages 273-293, July. [Downloadable!] (restricted)
  5. Oscar J. Cacho & Robyn L. Hean & Russell M. Wise, 2003. "Carbon-accounting methods and reforestation incentives," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society and Blackwell Publishing Asia Pty Ltd., vol. 47(2), pages 153-179, 06. [Downloadable!] (restricted)
  6. Otsuka, Keijiro & Place, Frank, 2001. "Land tenure and natural resource management," Food policy statements 34, International Food Policy Research Institute (IFPRI). [Downloadable!]
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Kingwell, Ross & Harris-Adams, Keely, 2009. "An analysis of the spatial and temporal patterns of greenhouse gas emissions by agriculture in Western Australia and the opportunities for agroforestry offsets," 2009 Conference (53rd), February 11-13, 2009, Cairns, Australia 48161, Australian Agricultural and Resource Economics Society. [Downloadable!]
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