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The land use change time-accounting failure

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  • Marion Dupoux

    (EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique)

Abstract

Land use change (LUC) is the second largest human-induced source of greenhouse gases. While LUC impacts are mostly immediate, policy makers consider it to be evenly spread over time. In the context of public evaluation of projects, I theoretically show that, as long as the discounting process perfectly offsets the rise of carbon prices, cost-benefit analysis outcomes are not affected. When this condition does not hold, which is particular to the global warming issue, the uniform time-accounting of LUC distorts present values by emphasizing both the discounting process and the increase in the carbon price over time. This induced bias is quantified in a case study of bioethanol in France. Depending on the type of impact and discounting and carbon pricing assumptions, a downward/upward bias between + or - 15% and + or - 30% of the LUC value is found. Two simple decision tools are provided to improve accounting of LUC impacts.

Suggested Citation

  • Marion Dupoux, 2016. "The land use change time-accounting failure," Working Papers hal-04141581, HAL.
    • Handle: RePEc:hal:wpaper:hal-04141581
    Note: View the original document on HAL open archive server: https://hal.science/hal-04141581
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    References listed on IDEAS

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