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HOW COSTLY ARE CARBON OFFSETS? A META-ANALYSIS OF CARBON FOREST SINKS

Gerrit van Kooten, Alison J. Eagle, James Manley () and Tara M. Smolak

No 18166, Working Papers from University of Victoria, Resource Economics and Policy

Abstract: Carbon terrestrial sinks are seen as a low-cost alternative to fuel switching and reduced fossil fuel use for lowering atmospheric CO2. As a result of agreements reached at Bonn and Marrakech, carbon offsets have taken on much greater importance in meeting Kyoto targets for the first commitment period. In this study, meta-regression analysis is used to examine 981 estimates from 55 studies of the costs of creating carbon offsets using forestry. Baseline estimates of costs of sequestering carbon through forest conservation are US$46.62-$260.29 per tC ($12.71-$70.99 per t CO2). Tree planting and agroforestry activities increase costs by more than 200%. When post-harvest storage of carbon in wood products, or substitution of biomass for fossil fuels in energy production, are taken into account, costs are lowest - some $12.53/tC to $68.44/tC ($3.42-$18.67/t CO2). Average costs are greater, between $116.76 and $1406.60/tC($31.84-$383.62/t CO2), when appropriate account is taken of the opportunity costs of land. Peer review of the studies increases costs by a factor or 10 or more, depending on the model. The use of marginal cost estimates instead of average cost results in much higher costs for carbon sequestration, in the range of thousands of dollars per tC, although few studies used this method of cost assessment.

Keywords: Resource; /Energy; Economics; and; Policy (search for similar items in EconPapers)
Pages: 37
Date: 2004
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Persistent link: https://EconPapers.repec.org/RePEc:ags:uvicwp:18166

DOI: 10.22004/ag.econ.18166

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