EconPapers    
Economics at your fingertips  
 

Forest carbon offsets and carbon emissions trading: Problems of contracting

Gerrit van Kooten

Forest Policy and Economics, 2017, vol. 75, issue C, 83-88

Abstract: The process of monitoring and measuring the carbon fluxes associated with forestry is complex and costly, and the process is subject to asymmetric information, perverse incentives and inadequate institutions. The upshot is that any trade in forestry related carbon credits is likely to involve unwarranted acts of faith. This means that, since carbon credits are a de facto fiat currency, their exchange value is likely to be unstable. Contracting requires good governance, which is often lacking. Meanwhile, parties to a contract to provide offsets for sale in carbon markets have misaligned incentives in addition to asymmetric information. This leads to a principal-agent problem that delays successful contracting and quite often leads to incompatible claims regarding the creation of carbon offsets. At worse, it results in corruption.

Keywords: Forest carbon offsets; Contracts and asymmetric information; Principal-agent problem; Climate change mitigation (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1389934116304622
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:forpol:v:75:y:2017:i:c:p:83-88

DOI: 10.1016/j.forpol.2016.12.006

Access Statistics for this article

Forest Policy and Economics is currently edited by M. Krott

More articles in Forest Policy and Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

 
Page updated 2021-06-30
Handle: RePEc:eee:forpol:v:75:y:2017:i:c:p:83-88