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

Author

Listed:
  • 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
    as

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    File URL: http://web.uvic.ca/~repa/publications/REPA%20working%20papers/WorkingPaper2005-10.pdf
    File Function: Final version, 2005
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    References listed on IDEAS

    as
    1. Lewandrowski, Jan & Peters, Mark & Jones, Carol & House, Robert & Sperow, Mark & Eve, Marlene & Paustian, Keith, 2004. "Economics of Sequestering Carbon in the U.S. Agricultural Sector," Technical Bulletins 184317, United States Department of Agriculture, Economic Research Service.
    2. Riahi, Keywan & Rubin, Edward S. & Taylor, Margaret R. & Schrattenholzer, Leo & Hounshell, David, 2004. "Technological learning for carbon capture and sequestration technologies," Energy Economics, Elsevier, vol. 26(4), pages 539-564, July.
    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.
    4. van 't Veld, Klaas & Plantinga, Andrew, 2005. "Carbon sequestration or abatement? The effect of rising carbon prices on the optimal portfolio of greenhouse-gas mitigation strategies," Journal of Environmental Economics and Management, Elsevier, vol. 50(1), pages 59-81, July.
    5. G. C. van Kooten, 2004. "Climate Change Economics," Books, Edward Elgar Publishing, number 3424.
    6. Bruno Locatelli & Lucio Pedroni, 2004. "Accounting methods for carbon credits: impacts on the minimum area of forestry projects under the Clean Development Mechanism," Climate Policy, Taylor & Francis Journals, vol. 4(2), pages 193-204, June.
    7. Roger A. Sedjo & Gregg Marland, 2003. "Inter-trading permanent emissions credits and rented temporary carbon emissions offsets: some issues and alternatives," Climate Policy, Taylor & Francis Journals, vol. 3(4), pages 435-444, December.
    8. Michael Dutschke, 2002. "Fractions of permanence – Squaring the cycle of sink carbon accounting," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 7(4), pages 381-402, December.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    climate change; carbon offset; carbon sinks; discounting physical carbon;

    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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