How Costly are Carbon Offsets? A Meta-Analysis of Forest Carbon Sinks

Gerrit van Kooten, Alison Eagle, James Manley and Tara Smolak

No 2004-01, Working Papers from University of Victoria, Department of Economics, Resource Economics and Policy Analysis Research Group

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: climate change; Kyoto Protocol, meta-regression analysis, carbon-uptake costs, forest sinks (search for similar items in EconPapers)
JEL-codes: Q23 Q27 Q54 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2004
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Citations: View citations in EconPapers (68)

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