IDEAS home Printed from https://ideas.repec.org/p/mtu/wpaper/03_12.html

Efficient Contracts for Carbon Credits from Reforestation Projects

Author

Listed:
  • Suzi Kerr

    (Motu Economic and Social Policy Research)

Abstract

This paper tackles the complex issue of how buyers and sellers within a domestic carbon credit system designed to include regenerating indigenous forest would optimally design contracts for trades of the new good, "carbon sink credits". The paper begins by briefly defining the constraints that sink projects must meet. This implicitly shows the freedom we have in designing contracts. In the context of a simple numerical example I discuss the constraints that the market puts on contracts. In particular I consider the interests of the buyers and sellers, and how they can maximise and share gains through contract design. I outline the sources of risk and discuss who has advantages in dealing with these risks. The best contract designs impose the risk on those most able to address or absorb it. I illustrate the potential gains from sink contracts with a range of conditions and contracts.

Suggested Citation

  • Suzi Kerr, 2003. "Efficient Contracts for Carbon Credits from Reforestation Projects," Motu Working Papers 03_12, Motu Economic and Public Policy Research.
    • Handle: RePEc:mtu:wpaper:03_12
    as

    Download full text from publisher

    File URL: https://motu-www.motu.org.nz/wpapers/03_12.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Toman, Michael & Kerr, Suzi & Sedjo, Roger & Birdsey, Richard & Kauppi, Pekka & Noble, Ian & Brown, Sandra & Krankina, Olga & Moura-Costa, Pedro, 2001. "Can Carbon Sinks be Operational? An RFF Workshop Summary," RFF Working Paper Series dp-01-26, Resources for the Future.
    2. Sedjo, Roger A. & Toman, Michael, 2001. "Can Carbon Sinks Be Operational? RFF Workshop Proceedings," Discussion Papers 10480, Resources for the Future.
    3. Philip Fearnside & Daniel Lashof & Pedro Moura-Costa, 2000. "Accounting for time in Mitigating Global Warming through land-use change and forestry," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 5(3), pages 239-270, September.
    4. Chomitz, Kenneth M., 2000. "Evaluating carbon offsets from forestry and energy projects," Policy Research Working Paper Series 2357, The World Bank.
    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. Kerr, Suzi & Brunton, Emma & Chapman, Ralph, 2004. "Policy to Encourage Carbon Sequestration in Plantation Forests," Motu Working Papers 292983, Motu Economic and Public Policy Research.
    2. Grimes, Arthur, 2005. "Regional and industry cycles in Australasia: Implications for a common currency," Journal of Asian Economics, Elsevier, vol. 16(3), pages 380-397, June.
    3. Kerr, Suzi & Hendy, Joanna & Liu, Shuguang & Pfaff, Alexander, 2004. "Tropical Forest Protection, Uncertainty, and the Environmental Integrity of Carbon Mitigation Policies," Motu Working Papers 292991, Motu Economic and Public Policy Research.
    4. David C. Maré & Michelle Poland, 2005. "Defining Geographic Communities," Motu Working Papers 05_09, Motu Economic and Public Policy Research.
    5. Arthur Grimes, 2006. "Intra & inter-regional industry shocks: A new metric with application to Australasian currency union," New Zealand Economic Papers, Taylor & Francis Journals, vol. 40(1), pages 23-44.
    6. Mare, David, 2005. "Indirect Effects of Active Labour Market Policies," Motu Working Papers 292900, Motu Economic and Public Policy Research.

    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. Kerr, Suzi, "undated". "Indigenous Forests and Forest Sink Policy in New Zealand," Motu Working Papers 293006, Motu Economic and Public Policy Research.
    2. Cacho, Oscar J. & Marshall, Graham R. & Milne, Mary, "undated". "Smallholder agroforestry projects: Potential for carbon sequestration and poverty alleviation," ESA Working Papers 289093, Food and Agriculture Organization of the United Nations, Agricultural Development Economics Division (ESA).
    3. Oscar J. Cacho & Robyn L. Hean & Russell M. Wise, 2003. "Carbon‐accounting methods and reforestation incentives," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 47(2), pages 153-179, June.
    4. Parisa, Zack & Marland, Eric & Sohngen, Brent & Marland, Gregg & Jenkins, Jennifer, 2022. "The time value of carbon storage," Forest Policy and Economics, Elsevier, vol. 144(C).
    5. Roger Sedjo, 2002. "Wood materials used as a means to reduce greenhouse gases (GHGs): An examination of wooden utility poles," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 7(2), pages 191-200, June.
    6. Marshall, Liz & Kelly, Alexia, 2010. "The Time Value of Carbon and Carbon Storage: Clarifying the terms and the policy implications of the debate," MPRA Paper 27326, University Library of Munich, Germany.
    7. Heli Lu & Guifang Liu, 2015. "Opportunity Costs of Carbon Emissions Stemming from Changes in Land Use," Sustainability, MDPI, vol. 7(4), pages 1-18, March.
    8. Annie Levasseur & Pascal Lesage & Manuele Margni & Miguel Brandão & Réjean Samson, 2012. "Assessing temporary carbon sequestration and storage projects through land use, land-use change and forestry: comparison of dynamic life cycle assessment with ton-year approaches," Climatic Change, Springer, vol. 115(3), pages 759-776, December.
    9. Osborne, Tracey & Kiker, Clyde, 2005. "Carbon offsets as an economic alternative to large-scale logging: a case study in Guyana," Ecological Economics, Elsevier, vol. 52(4), pages 481-496, March.
    10. Michael Dutschke, 2007. "CDM Forestry and the Ultimate Objective of the Climate Convention," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 12(2), pages 275-302, February.
    11. Kenneth Lyon, 2004. "Modeling Timber Supply, Fuel-Wood, and Atmospheric Carbon Mitigation," Working Papers 2004-19, Utah State University, Department of Economics.
    12. Rehdanz, Katrin & Tol, Richard S.J. & Wetzel, Patrick, 2006. "Ocean carbon sinks and international climate policy," Energy Policy, Elsevier, vol. 34(18), pages 3516-3526, December.
    13. H. Damon Matthews & Kirsten Zickfeld & Alexander Koch & Amy Luers, 2023. "Accounting for the climate benefit of temporary carbon storage in nature," Nature Communications, Nature, vol. 14(1), pages 1-10, December.
    14. Fearnside, Philip M., 2001. "Saving tropical forests as a global warming countermeasure: an issue that divides the environmental movement," Ecological Economics, Elsevier, vol. 39(2), pages 167-184, November.
    15. Miko Kirschbaum, 2006. "Temporary Carbon Sequestration Cannot Prevent Climate Change," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 11(5), pages 1151-1164, September.
    16. Nahuel Bautista & Bruno D. V. Marino & J. William Munger, 2021. "Science to Commerce: A Commercial-Scale Protocol for Carbon Trading Applied to a 28-Year Record of Forest Carbon Monitoring at the Harvard Forest," Land, MDPI, vol. 10(2), pages 1-22, February.
    17. Olivia Cintas & Göran Berndes & Annette L. Cowie & Gustaf Egnell & Hampus Holmström & Göran I. Ågren, 2016. "The climate effect of increased forest bioenergy use in Sweden: evaluation at different spatial and temporal scales," Wiley Interdisciplinary Reviews: Energy and Environment, Wiley Blackwell, vol. 5(3), pages 351-369, May.
    18. Lasse Ringius, 2001. "What Prospects for Soil Carbon Sequestration in the CDM? Cop-6 and beyond," Energy & Environment, , vol. 12(4), pages 275-285, July.
    19. Klaus Keller & Zili Yang & Matt Hall & David F. Bradford, 2003. "Carbon Dioxide Sequestrian: When And How Much?," Working Papers 108, Princeton University, Department of Economics, Center for Economic Policy Studies..
    20. G. Cornelis van Kooten, 2003. "Smoke and Mirrors: The Kyoto Protocol and Beyond," Canadian Public Policy, University of Toronto Press, vol. 29(4), pages 397-415, December.

    More about this item

    JEL classification:

    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy

    Statistics

    Access and download statistics

    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:mtu:wpaper:03_12. 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: Emma Williams (email available below). General contact details of provider: https://edirc.repec.org/data/motuenz.html .

    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.