Designing efficient markets for carbon offsets with distributional constraints

Antonio Bento (), Ravi Kanbur and Benjamin Leard

Journal of Environmental Economics and Management, 2015, vol. 70, issue C, 51-71

Abstract: This paper presents an assessment of the relative efficacy of three key instruments – baselines, trade ratios and limits - which are under policy discussion in the design of carbon offset programs. We rank the instruments by their implications for total emissions, economic efficiency, and efficiency gain relative to a distributional transfer from capped to uncapped sectors. We find that the baseline is the best instrument for maximizing welfare as it directly reduces the share of offsets that are non-additional and that second-best policies do not sacrifice much welfare relative to the standard first-best policy prescription.

Keywords: Carbon offsets; Cap and trade; Additionality; Distributional concerns (search for similar items in EconPapers)
JEL-codes: Q48 Q52 Q54 Q58 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (19)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeeman:v:70:y:2015:i:c:p:51-71

DOI: 10.1016/j.jeem.2014.10.003

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