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Mitigating Climate Change by Planting Trees: The Transaction Costs Trap


  • G. Cornelis van Kooten
  • Sabina Lee Shaikh
  • Pavel Suchánek


Land-use change and forestry projects are considered a low-cost option for addressing climate change mitigation. In Canada, afforestation is targeted to sequester enough carbon to meet one-fifth of its international obligations, and at lower cost than emissions reduction. We examine economic aspects of the institutions and incentives needed to encourage landowners in Canada to adopt tree planting on a large scale. Based on data from a survey of landowners, the transaction costs of getting landowners to convert their land from agriculture to plantation forests appear to be a significant obstacle, possibly increasing the costs of afforestation projects beyond what conventional economic analysis suggests.

Suggested Citation

  • G. Cornelis van Kooten & Sabina Lee Shaikh & Pavel Suchánek, 2002. "Mitigating Climate Change by Planting Trees: The Transaction Costs Trap," Land Economics, University of Wisconsin Press, vol. 78(4), pages 559-572.
  • Handle: RePEc:uwp:landec:v:78:y:2002:i:4:p:559-572

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    References listed on IDEAS

    1. repec:hrv:faseco:33077889 is not listed on IDEAS
    2. Hart, Oliver & Moore, John, 1990. "Property Rights and the Nature of the Firm," Journal of Political Economy, University of Chicago Press, vol. 98(6), pages 1119-1158, December.
    3. Andrei Shleifer, 1998. "State versus Private Ownership," Journal of Economic Perspectives, American Economic Association, vol. 12(4), pages 133-150, Fall.
    4. Feng, Hongli & Zhao, Jinhua & Kling, Catherine L., 2001. "Carbon: The next big cash crop?," Choices, Agricultural and Applied Economics Association, vol. 16(2).
    5. Bell, Caroline D. & Roberts, Roland K. & English, Burton C. & Park, William M., 1994. "A Logit Analysis Of Participation In Tennessee'S Forest Stewardship Program," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 26(02), December.
    6. G. Cornelis Kooten, 2000. "Economic Dynamics of Tree Planting for Carbon Uptake on Marginal Agricultural Lands," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 48(1), pages 51-65, March.
    7. G. Cornelis van Kooten & Clark S. Binkley & Gregg Delcourt, 1995. "Effect of Carbon Taxes and Subsidies on Optimal Forest Rotation Age and Supply of Carbon Services," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 77(2), pages 365-374.
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    Cited by:

    1. Sen Wang & Tim Bogle & G. Cornelis van Kooten, 2012. "Forestry and the New Institutional Economics," Working Papers 2012-05, University of Victoria, Department of Economics, Resource Economics and Policy Analysis Research Group.
    2. Shaikh, Sabina L. & Sun, Lili & Cornelis van Kooten, G., 2007. "Treating respondent uncertainty in contingent valuation: A comparison of empirical treatments," Ecological Economics, Elsevier, vol. 62(1), pages 115-125, April.
    3. Fulton, Murray E. & Cule, Monika & Weersink, Alfons, 2005. "Greenhouse Gas Policy and Canadian Agriculture," CAFRI: Current Agriculture, Food and Resource Issues, Canadian Agricultural Economics Society, issue 06.
    4. repec:gam:jsusta:v:9:y:2017:i:10:p:1840-:d:114789 is not listed on IDEAS
    5. Kim, Taeyoung & Langpap, Christian, 2016. "Agricultural landowners’ response to incentives for afforestation," Resource and Energy Economics, Elsevier, vol. 43(C), pages 93-111.
    6. Jung, Martina, 2003. "The Role of Forestry Sinks in the CDM - Analysing the Effects of Policy Decisions on the Carbon Market," HWWA Discussion Papers 241, Hamburg Institute of International Economics (HWWA).
    7. Iain Brown & Marie Castellazzi & Diana Feliciano, 2014. "Comparing Path Dependence and Spatial Targeting of Land Use in Implementing Climate Change Responses," Land, MDPI, Open Access Journal, vol. 3(3), pages 1-24, July.
    8. Sjølie, Hanne K. & Latta, Greg S. & Solberg, Birger, 2013. "Dual discounting in climate change mitigation in the forest sector," Journal of Forest Economics, Elsevier, vol. 19(4), pages 416-431.
    9. Gong, Yazhen & Bull, Gary & Baylis, Kathy, 2010. "Participation in the world's first clean development mechanism forest project: The role of property rights, social capital and contractual rules," Ecological Economics, Elsevier, vol. 69(6), pages 1292-1302, April.
    10. Elberg Nielsen, Anne Sofie & Plantinga, Andrew J. & Alig, Ralph J., 2014. "Mitigating climate change through afforestation: New cost estimates for the United States," Resource and Energy Economics, Elsevier, vol. 36(1), pages 83-98.
    11. Shaikh, Sabina L. & van Kooten, G. Cornelis, 2003. "Using Contingent Valuation With Respondent Uncertainty To Estimate The Costs Of Climate Change Programs: An Application To Canadian Landowners," 2003 Annual meeting, July 27-30, Montreal, Canada 21906, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    12. Di Falco, Salvatore & Bulte, Erwin, 2013. "The Impact of Kinship Networks on the Adoption of Risk-Mitigating Strategies in Ethiopia," World Development, Elsevier, vol. 43(C), pages 100-110.
    13. Hallmann, Fanfan W. & Amacher, Gregory S., 2014. "Uncertain emerging biomass markets, ecosystem services, and optimal land use," Forest Policy and Economics, Elsevier, vol. 47(C), pages 46-56.
    14. Adams, Thomas & Turner, James A., 2012. "An investigation into the effects of an emissions trading scheme on forest management and land use in New Zealand," Forest Policy and Economics, Elsevier, vol. 15(C), pages 78-90.
    15. Pajot, Guillaume, 2011. "Rewarding carbon sequestration in South-Western French forests: A costly operation?," Journal of Forest Economics, Elsevier, vol. 17(4), pages 363-377.
    16. Yazhen Gong, 2010. "Integrating Social Capital into Institutional Analysis of the Guangxi CDM Forest-based Carbon Sequestration Project," EEPSEA Special and Technical Paper tp201010t2, Economy and Environment Program for Southeast Asia (EEPSEA), revised Oct 2010.
    17. Markowski-Lindsay, Marla & Stevens, Thomas & Kittredge, David B. & Butler, Brett J. & Catanzaro, Paul & Dickinson, Brenton J., 2011. "Barriers to Massachusetts forest landowner participation in carbon markets," Ecological Economics, Elsevier, vol. 71(C), pages 180-190.
    18. Cacho, Oscar J. & Lipper, Leslie & Moss, Jonathan, 2013. "Transaction costs of carbon offset projects: A comparative study," Ecological Economics, Elsevier, vol. 88(C), pages 232-243.

    More about this item

    JEL classification:

    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water


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