Replacing carbon lost from forests: an assessment of insurance, reserves, and expiring credits

Susan Subak

Climate Policy, 2003, vol. 3, issue 2, 107-122

Abstract: Concern over the "non-permanence" or reversibility of carbon sequestration projects has been prominent in discussions over how to develop guidelines for forest project investments under the Clean Development Mechanism (CDM) of the UNFCCC Kyoto Protocol. Accordingly, a number of approaches have been proposed that aim to help ensure that parties do not receive credit for carbon that is lost before project obligations are fulfilled. These approaches include forest carbon insurance, land reserves, and issuance of expiring credits. The potential costs of each of these different approaches are evaluated using a range of assumptions about project length, risk and discount rate, and a comparison of costs is ventured based on the estimated reduction in value of these credits compared with uninsured, and permanent credits. Obstacles to participation in the different approaches are discussed related to problems of long-term commitments, project scale, rising replacement costs, and low credit value. It is concluded that a system of expiring credits, which could be coupled with insurance or reserves, could guarantee obligations that span time-scales longer than that of conventional insurance policies while maintaining incentives for long-term sequestration.

Date: 2003
References: View complete reference list from CitEc
Citations: View citations in EconPapers (21)

Downloads: (external link)
http://hdl.handle.net/10.3763/cpol.2003.0315 (text/html)
Access to full text is restricted to subscribers.

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:taf:tcpoxx:v:3:y:2003:i:2:p:107-122

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/tcpo20

DOI: 10.3763/cpol.2003.0315

Access Statistics for this article

Climate Policy is currently edited by Professor Michael Grubb

More articles in Climate Policy from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().