IDEAS home Printed from https://ideas.repec.org/p/wpa/wuwpot/0401003.html
   My bibliography  Save this paper

Efficient Contracts For Carbon Credits From Reforestation Projects

Author

Listed:
  • Suzi Kerr

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, 2004. "Efficient Contracts For Carbon Credits From Reforestation Projects," Others 0401003, University Library of Munich, Germany.
  • Handle: RePEc:wpa:wuwpot:0401003
    Note: Type of Document - pdf; prepared on Word 2000; to print on PC;
    as

    Download full text from publisher

    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/othr/papers/0401/0401003.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. Michelle Poland & David C Maré, 2005. "Defining Geographic Communities," Urban/Regional 0509016, University Library of Munich, Germany.
    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. Suzi Kerr & Emma Brunton & Ralph Chapman, 2004. "Policy to Encourage Carbon Sequestration in Plantation Forests," Working Papers 04_05, Motu Economic and Public Policy Research.
    4. Suzi Kerr & Joanna Hendy & Shuguang Liu & Alexander S. P. Pfaff, 2004. "Tropical Forest Protection, Uncertainty, and the Environmental Integrity of Carbon Mitigation Policies," Working Papers 04_03, 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. David C Maré, 2005. "Indirect Effects of Active Labour Market Policies," HEW 0509004, University Library of Munich, Germany.

    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. Suzi Kerr, 2003. "Indigenous Forests and Forest Sink Policy in New Zealand," Working Papers 03_15, Motu Economic and Public Policy Research.
    2. Oscar J. Cacho & Graham R. Marshall & Mary Milne, 2003. "Smallholder Agroforestry Projects: Potential for carbon sequestration and poverty alleviation," Working Papers 03-06, Agricultural and Development Economics Division of the Food and Agriculture Organization of the United Nations (FAO - 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. 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.
    5. 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.
    6. 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).
    7. 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.
    8. 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.
    9. 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.
    10. Kenneth Lyon, 2004. "Modeling Timber Supply, Fuel-Wood, and Atmospheric Carbon Mitigation," Working Papers 2004-19, Utah State University, Department of Economics.
    11. 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.
    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. 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.
    14. Sabina Shaikh & Pavel Suchánek & Lili Sun & G. Cornelis van Kooten, 2003. "Does Inclusion of Landowners’ Non-Market Values Lower Costs of Creating Carbon Forest Sinks?," Working Papers 2003-03, University of Victoria, Department of Economics, Resource Economics and Policy Analysis Research Group.
    15. van Kooten, G. Cornelis, 2004. "Economics of Forest and Agricultural Carbon Sinks," Working Papers 18160, University of Victoria, Resource Economics and Policy.
    16. 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.
    17. 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.
    18. Lucio Pedroni, 2005. "Carbon accounting for sinks in the CDM after CoP-9," Climate Policy, Taylor & Francis Journals, vol. 5(4), pages 407-418, July.
    19. Jens Leifeld & Sonja M. Paul & Miriam Gross-Schmölders & Yuqiao Wang & Chloé Wüst-Galley, 2025. "Crediting peatland rewetting for carbon farming: some considerations amidst optimism," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 30(2), pages 1-19, February.
    20. van Kooten, G. Cornelis & Eagle, Alison J. & Manley, James G. & Smolak, Tara M., 2004. "How Costly Are Carbon Offsets? A Meta-Analysis Of Carbon Forest Sinks," Working Papers 18166, University of Victoria, Resource Economics and Policy.

    More about this item

    Keywords

    climate; contracts; carbon credits; reforestation; projects;
    All these keywords.

    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

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:wpa:wuwpot:0401003. 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: EconWPA The email address of this maintainer does not seem to be valid anymore. Please ask EconWPA to update the entry or send us the correct address (email available below). General contact details of provider: https://econwpa.ub.uni-muenchen.de .

    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.