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Carbon Sinks and Reservoirs: The Value of Permanence and Role of Discounting

Pablo C. Benitez and Gerrit van Kooten

No 37018, Working Papers from University of Victoria, Resource Economics and Policy

Abstract: Scientists are enthusiastic about storing carbon in terrestrial sinks and geological reservoirs in order to obviate the need for lifestyle-changing reductions in fossil-fuel use. Estimating relative costs of various options depends on how permanence is assessed and whether physical carbon is discounted. We demonstrate that, in carbon markets, terrestrial sinks credits cannot be traded one-for-one for emission reduction credits and the conversion factor would depend on how long sinks keep CO2 out of the atmosphere as compared with emission reductions and, discounting physical carbon. As a result, the authority could not determine a conversion factor and the market would be required to do so.

Keywords: Environmental Economics and Policy; Resource /Energy Economics and Policy (search for similar items in EconPapers)
Pages: 22
Date: 2005-10
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Persistent link: https://EconPapers.repec.org/RePEc:ags:uvicwp:37018

DOI: 10.22004/ag.econ.37018

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