Contracting for Impure Public Goods: Carbon Offsets and Additionality
AbstractGovernments contracting with private agents for the provision of an impure public good must contend with agents who would potentially supply the good absent any payments. This additionality problem is centrally important in the use of carbon offsets as part of climate change mitigation. Analyzing optimal contracts for forest carbon sequestration, an important offset category, we conduct a national-scale simulation using results from an econometric model of land-use change. The results indicate that for an increase in forest area of 50 million acres, annual government expenditures with optimal contracts are about $4 billion lower compared than under a uniform subsidy.
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Bibliographic InfoPaper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2011.13.
Date of creation: Feb 2011
Date of revision:
Carbon Sequestration; Incentive Contracting; Offsets; Additionality;
Other versions of this item:
- Charles Mason & Andrew Plantinga, 2011. "Contracting for Impure Public Goods: Carbon Offsets and Additionality," NBER Working Papers 16963, National Bureau of Economic Research, Inc.
- Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
- D8 - Microeconomics - - Information, Knowledge, and Uncertainty
- L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
This paper has been announced in the following NEP Reports:
- NEP-AGR-2011-03-05 (Agricultural Economics)
- NEP-ALL-2011-03-05 (All new papers)
- NEP-CMP-2011-03-05 (Computational Economics)
- NEP-ENE-2011-03-05 (Energy Economics)
- NEP-ENV-2011-03-05 (Environmental Economics)
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