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The Costs of Error in Setting Reference Rates for Reduced Deforestation

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  • Patrick Doupe

Abstract

Setting reference rates for policy to reduce emissions from deforestation and forest degradation is challenging. This challenge is reflected in the number of proposals for reference rate design. In this paper I show how these proposals have basic structural weaknesses that increase the likelihood of reference rates being set with error. This leads to higher costs of reduced-deforestation policy. I propose that reference rates be designed to minimize the cost of forecast error. These ideas are illustrated through forecasting agricultural land expansion in deforesting countries.

Suggested Citation

  • Patrick Doupe, 2015. "The Costs of Error in Setting Reference Rates for Reduced Deforestation," Land Economics, University of Wisconsin Press, vol. 91(4), pages 723-738.
    • Handle: RePEc:uwp:landec:v:91:y:2015:i:4:p:723-738
    Note: DOI: 10.3368/le.91.4.723
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    File URL: http://le.uwpress.org/cgi/reprint/91/4/723
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    Cited by:

    1. Kaushal , Kevin R. & Rosendahl, Knut Einar, 2019. "Optimal REDD+ in the carbon market," Working Paper Series 3-2019, Norwegian University of Life Sciences, School of Economics and Business.

    More about this item

    JEL classification:

    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
    • Q57 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Ecological Economics

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