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 to the use of carbon offsets to mitigate climate change. We analyze optimal contracts for forest carbon, an important offset category. A novel national-scale simulation of the contracts is conducted that uses econometric results derived from micro data. For a 50 million acre increase in forest area, annual government expenditures with optimal contracts are found to be about $4 billion lower compared to costs with a uniform subsidy.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 16963.
Date of creation: Apr 2011
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Other versions of this item:
- Charles F. Mason & Andrew J. Plantinga, 2011. "Contracting for Impure Public Goods: Carbon Offsets and Additionality," Working Papers 2011.13, Fondazione Eni Enrico Mattei.
- D8 - Microeconomics - - Information, Knowledge, and Uncertainty
- L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
- Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
This paper has been announced in the following NEP Reports:
- NEP-AGR-2011-04-30 (Agricultural Economics)
- NEP-ALL-2011-04-30 (All new papers)
- NEP-CMP-2011-04-30 (Computational Economics)
- NEP-ENE-2011-04-30 (Energy Economics)
- NEP-ENV-2011-04-30 (Environmental Economics)
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- G. Cornelis van Kooten & Alison Eagle & James Manley & Tara Smolak, 2004. "How Costly are Carbon Offsets? A Meta-Analysis of Forest Carbon Sinks," Working Papers 2004-01, University of Victoria, Department of Economics, Resource Economics and Policy Analysis Research Group.
- Arthur van Benthem & Suzi Kerr, 2010.
"Optimizing Voluntary Deforestation Policy in the Face of Adverse Selection and Costly Transfers,"
10_04, Motu Economic and Public Policy Research.
- van Benthem, Arthur A. & Kerr, Suzi, 2010. "Optimizing Voluntary Deforestation Policy in the Face of Adverse Selection and Costly Transfers," 2010 Conference, August 26-27, 2010, Nelson, New Zealand 96813, New Zealand Agricultural and Resource Economics Society.
- Cho, Seong-Hoon & Kim, Heeho & Roberts, Roland K. & Kim, Taeyoung & Lee, Daegoon, 2014. "Effects of changes in forestland ownership on deforestation and urbanization and the resulting effects on greenhouse gas emissions," Journal of Forest Economics, Elsevier, vol. 20(1), pages 93-109.
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