EXPLAINING THE PRICE OF VOLUNTARY CARBON OFFSETS

Marc Conte () and Matthew Kotchen

Climate Change Economics (CCE), 2010, vol. 01, issue 02, 93-111

Abstract: This paper identifies factors that explain the large variability in the price of voluntary carbon offsets. We estimate hedonic price functions using a variety of provider- and project-level characteristics as explanatory variables. We find that providers located in Europe sell offsets at prices that are approximately 30% higher than providers located in either North America or Australasia. Contrary to what one might expect, offset prices are generally higher, by roughly 20%, when projects are located in developing or least-developed nations. But this result does not hold for forestry-based projects. We find evidence that forestry-based offsets sell at lower prices, and the result is particularly strong when projects are located in developing or least-developed nations. Offsets that are certified under the Clean Development Mechanism or the Gold Standard, and therefore qualify for emission reductions under the Kyoto Protocol, sell at a premium of more than 30%; however, third-party certification from the Voluntary Carbon Standard, one of the popular certifiers, is associated with a price discount. Variables that have no effect on offset prices are the number of projects that a provider manages and a provider's status as for-profit or not-for-profit.

Keywords: Voluntary carbon offsets; hedonic price method (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (23)

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Working Paper: Explaining the Price of Voluntary Carbon Offsets (2009)
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DOI: 10.1142/S2010007810000091

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