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
Date of revision:
Publication status: published as Mason, C.F., and A.J. Plantinga. 201 3 . The Additionality Problem with Offsets: Optimal Contracts for Carbon Sequestration in Forests. Journal of Envi ronmental Economics and Management 66:1 - 14.
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Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
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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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