Realizing the social value of impermanent carbon credits
Andrew Balmford,
Srinivasan Keshav,
Frank Venmans,
David Coomes,
Ben Groom,
Anil Madhavapeddy and
Tom Swinfield
LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library
Abstract:
Efforts to avert dangerous climate change by conserving and restoring natural habitats are hampered by concerns over the credibility of methods used to quantify their long-term impacts. Here we develop a flexible framework for estimating the net social benefit of impermanent nature-based interventions that integrates three substantial advances: (1) conceptualizing the permanence of a project’s impact as its additionality over time; (2) risk-averse estimation of the social cost of future reversals of carbon gains; and (3) post-credit monitoring to correct errors in deliberately pessimistic release forecasts. Our framework generates incentives for safeguarding already credited carbon while enabling would-be investors to make like-for-like comparisons of diverse carbon projects. Preliminary analyses suggest nature-derived credits may be competitively priced even after adjusting for impermanence.
JEL-codes: Q50 (search for similar items in EconPapers)
Pages: 7 pages
Date: 2023-11-01
New Economics Papers: this item is included in nep-ene and nep-env
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Citations: View citations in EconPapers (1)
Published in Nature Climate Change, 1, November, 2023, 13(11), pp. 1172 - 1178. ISSN: 1758-678X
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:120730
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