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Carbon Sinks and Reservoirs: The Value of Permanence and Role of Discounting

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  • Pablo Benítez
  • G. Cornelis van Kooten

Abstract

Scientists are enthusiastic about storing carbon in terrestrial sinks and geological reservoirs in order to obviate the need for lifestyle-changing reductions in fossil-fuel use. Estimating relative costs of various options depends on how permanence is assessed and whether physical carbon is discounted. We demonstrate that, in carbon markets, terrestrial sinks credits cannot be traded one-for-one for emission reduction credits and the conversion factor would depend on how long sinks keep CO2 out of the atmosphere as compared with emission reductions and, discounting physical carbon. As a result, the authority could not determine a conversion factor and the market would be required to do so.

Suggested Citation

  • Pablo Benítez & G. Cornelis van Kooten, 2005. "Carbon Sinks and Reservoirs: The Value of Permanence and Role of Discounting," Working Papers 2005-10, University of Victoria, Department of Economics, Resource Economics and Policy Analysis Research Group.
    • Handle: RePEc:rep:wpaper:2005-10
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    References listed on IDEAS

    as
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    3. Lewandrowski, Jan & Peters, Mark & Jones, Carol Adaire & House, Robert M. & Sperow, Mark & Eve, Marlen & Paustian, Keith H., 2004. "Economics Of Sequestering Carbon In The U.S. Agricultural Sector," Technical Bulletins 33569, United States Department of Agriculture, Economic Research Service.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    climate change; carbon offset; carbon sinks; discounting physical carbon;
    All these keywords.

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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