IDEAS home Printed from https://ideas.repec.org/a/ura/ecregj/v1y2014i3p273-288.html
   My bibliography  Save this article

Impacts of the Fairly Priced REDD-based CO2 Offset Options on the Electricity Producers and Consumers

Author

Listed:
  • Andrey Krasovskii

    (International Institute for Applied Systems Analysis (IIASA))

  • Nikolay Khabarov

    (International Institute for Applied Systems Analysis (IIASA))

  • Michael Obersteiner

    (International Institute for Applied Systems Analysis (IIASA))

Abstract

This paper deals with the modeling of two sectors of a regional economy: electricity and forestry. We show that CO2 price will impact not only the profits of the CO2 emitting electricity producer (decrease), but also the electricity prices for the consumer (increase), and, hence, some financial instruments might be implemented today in order to be prepared for the uncertain CO2 prices in the future. We elaborate financial instrument based on the Reduced Emissions from Deforestation and Degradation (REDD+) mechanism. We model optimal behavior of forest owner and electricity producer under uncertainty and determine equilibrium fair prices of REDD-based-options.

Suggested Citation

  • Andrey Krasovskii & Nikolay Khabarov & Michael Obersteiner, 2014. "Impacts of the Fairly Priced REDD-based CO2 Offset Options on the Electricity Producers and Consumers," Economy of region, Centre for Economic Security, Institute of Economics of Ural Branch of Russian Academy of Sciences, vol. 1(3), pages 273-288.
    • Handle: RePEc:ura:ecregj:v:1:y:2014:i:3:p:273-288
    as

    Download full text from publisher

    File URL: http://economyofregion.ru/Data/Issues/ER2014/September_2014/ERSeptember2014_273_288.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Simona Bigerna & Carlo Andrea BOLLINO, 2013. "Hourly Electricity Demand in Italian Market," Quaderni del Dipartimento di Economia, Finanza e Statistica 121/2013, Università di Perugia, Dipartimento Economia.
    2. Mark Cassano & Gordon Sick, 2013. "Valuation of a spark spread: an LM6000 power plant," The European Journal of Finance, Taylor & Francis Journals, vol. 19(7-8), pages 689-714, September.
    3. Benitez, Pablo C. & Obersteiner, Michael, 2006. "Site identification for carbon sequestration in Latin America: A grid-based economic approach," Forest Policy and Economics, Elsevier, vol. 8(6), pages 636-651, August.
    4. Joanne Evans & Lester C. Hunt (ed.), 2009. "International Handbook on the Economics of Energy," Books, Edward Elgar Publishing, number 12764.
    5. George B. Dantzig, 1955. "Linear Programming under Uncertainty," Management Science, INFORMS, vol. 1(3-4), pages 197-206, 04-07.
    6. Ruben N. Lubowski & Steven K. Rose, 2013. "The Potential for REDD+: Key Economic Modeling Insights and Issues," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 7(1), pages 67-90, January.
    7. Volker Krey, 2014. "Global energy-climate scenarios and models: a review," Wiley Interdisciplinary Reviews: Energy and Environment, Wiley Blackwell, vol. 3(4), pages 363-383, July.
    8. Bosetti, Valentina & Lubowski, Ruben & Golub, Alexander & Markandya, Anil, 2011. "Linking reduced deforestation and a global carbon market: implications for clean energy technology and policy flexibility," Environment and Development Economics, Cambridge University Press, vol. 16(4), pages 479-505, August.
    9. Golub, Alla & Hertel, Thomas & Lee, Huey-Lin & Rose, Steven & Sohngen, Brent, 2009. "The opportunity cost of land use and the global potential for greenhouse gas mitigation in agriculture and forestry," Resource and Energy Economics, Elsevier, vol. 31(4), pages 299-319, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Krasovskii, Andrey & Khabarov, Nikolay & Obersteiner, Michael, 2016. "Fair pricing of REDD-based emission offsets under risk preferences and benefit-sharing," Energy Policy, Elsevier, vol. 96(C), pages 193-205.
    2. Golub, Alexander & Lubowski, Ruben & Piris-Cabezas, Pedro, 2017. "Balancing Risks from Climate Policy Uncertainties: The Role of Options and Reduced Emissions from Deforestation and Forest Degradation," Ecological Economics, Elsevier, vol. 138(C), pages 90-98.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Krasovskii, Andrey & Khabarov, Nikolay & Obersteiner, Michael, 2016. "Fair pricing of REDD-based emission offsets under risk preferences and benefit-sharing," Energy Policy, Elsevier, vol. 96(C), pages 193-205.
    2. Andrey Krasovskii & Nikolay Khabarov & Ruben Lubowski & Michael Obersteiner, 2019. "Flexible Options for Greenhouse Gas-Emitting Energy Producer," Energies, MDPI, vol. 12(19), pages 1-20, October.
    3. Golub, Alexander & Lubowski, Ruben & Piris-Cabezas, Pedro, 2017. "Balancing Risks from Climate Policy Uncertainties: The Role of Options and Reduced Emissions from Deforestation and Forest Degradation," Ecological Economics, Elsevier, vol. 138(C), pages 90-98.
    4. Edwin Van Der Werf & Sonja Peterson, 2009. "Modeling linkages between climate policy and land use: an overview," Agricultural Economics, International Association of Agricultural Economists, vol. 40(5), pages 507-517, September.
    5. Eriksson, Mathilda, 2020. "Afforestation and avoided deforestation in a multi-regional integrated assessment model," Ecological Economics, Elsevier, vol. 169(C).
    6. Mykola Gusti & Nicklas Forsell & Petr Havlik & Nikolay Khabarov & Florian Kraxner & Michael Obersteiner, 2019. "The sensitivity of the costs of reducing emissions from deforestation and degradation (REDD) to future socioeconomic drivers and its implications for mitigation policy design," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 24(6), pages 1123-1141, August.
    7. Koch, Nicolas & Reuter, Wolf Heinrich & Fuss, Sabine & Grosjean, Godefroy, 2017. "Permits vs. offsets under investment uncertainty," Resource and Energy Economics, Elsevier, vol. 49(C), pages 33-47.
    8. Anderson Gwanyebit Kehbila & Dieudonne Alemagi & Peter Akong Minang, 2014. "Comparative Multi-Criteria Assessment of Climate Policies and Sustainable Development Strategies in Cameroon: Towards a GIS Decision-Support Tool for the Design of an Optimal REDD+ Strategy," Sustainability, MDPI, vol. 6(9), pages 1-16, September.
    9. Proost, Stef & Van Dender, Kurt, 2012. "Energy and environment challenges in the transport sector," Economics of Transportation, Elsevier, vol. 1(1), pages 77-87.
    10. Michael Freimer & Jeffrey Linderoth & Douglas Thomas, 2012. "The impact of sampling methods on bias and variance in stochastic linear programs," Computational Optimization and Applications, Springer, vol. 51(1), pages 51-75, January.
    11. Piris-Cabezas, Pedro & Lubowski, Ruben N. & Leslie, Gabriela, 2023. "Estimating the potential of international carbon markets to increase global climate ambition," World Development, Elsevier, vol. 167(C).
    12. Aghayi, Nazila & Maleki, Bentolhoda, 2016. "Efficiency measurement of DMUs with undesirable outputs under uncertainty based on the directional distance function: Application on bank industry," Energy, Elsevier, vol. 112(C), pages 376-387.
    13. J. F. F. Almeida & S. V. Conceição & L. R. Pinto & B. R. P. Oliveira & L. F. Rodrigues, 2022. "Optimal sales and operations planning for integrated steel industries," Annals of Operations Research, Springer, vol. 315(2), pages 773-790, August.
    14. Monge, Juan J. & Bryant, Henry L. & Gan, Jianbang & Richardson, James W., 2016. "Land use and general equilibrium implications of a forest-based carbon sequestration policy in the United States," Ecological Economics, Elsevier, vol. 127(C), pages 102-120.
    15. Truong Hong Trinh, 2017. "Value Balance and General Equilibrium Model," International Journal of Economics and Financial Issues, Econjournals, vol. 7(2), pages 485-491.
    16. Rong Li & Brent Sohngen & Xiaohui Tian, 2022. "Efficiency of forest carbon policies at intensive and extensive margins," American Journal of Agricultural Economics, John Wiley & Sons, vol. 104(4), pages 1243-1267, August.
    17. Bauer, Dana Marie & Sue Wing, Ian, 2010. "Economic Consequences of Pollinator Declines: A Synthesis," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 39(3), pages 1-16, October.
    18. Nicolas Taconet & Aurélie Méjean & Céline Guivarch, 2020. "Influence of climate change impacts and mitigation costs on inequality between countries," Climatic Change, Springer, vol. 160(1), pages 15-34, May.
    19. Jianhong Mu & Anne Wein & Bruce McCarl, 2015. "Land use and management change under climate change adaptation and mitigation strategies: a U.S. case study," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 20(7), pages 1041-1054, October.
    20. Chitnis, Mona & Sorrell, Steve, 2015. "Living up to expectations: Estimating direct and indirect rebound effects for UK households," Energy Economics, Elsevier, vol. 52(S1), pages 100-116.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ura:ecregj:v:1:y:2014:i:3:p:273-288. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Alexey Naydenov (email available below). General contact details of provider: http://www.economyofregion.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.