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Economics of Carbon Sequestration Projects Involving Smallholders

In: Payment for Environmental Services in Agricultural Landscapes

Author

Listed:
  • Oscar Cacho

    (University of New England)

Abstract

Afforestation and reforestation projects have the potential to help mitigate global warming by acting as sinks for CO2. However, participation in carbon-sink projects may be constrained by high costs. This problem may be particularly severe for projects involving smallholders in developing countries. Of particular concern are the transaction costs incurred in developing projects and measuring, certifying, and selling the carbon-sequestration services generated by such projects. This chapter addresses these issues by analyzing the implications of transaction and abatement costs in carbon-sequestration projects. A typology of transaction costs is presented, and estimates of the five cost types are derived based on a review of existing projects. The influences of project design on abatement costs and transaction costs are explored, and the critical values of a set of three project-design variables (farm price, number of participating farms, and minimum farm area) are identified for any given combination of transaction costs.

Suggested Citation

  • Oscar Cacho, 2009. "Economics of Carbon Sequestration Projects Involving Smallholders," Natural Resource Management and Policy, in: Leslie Lipper & Takumi Sakuyama & Randy Stringer & David Zilberman (ed.), Payment for Environmental Services in Agricultural Landscapes, chapter 5, pages 77-102, Springer.
  • Handle: RePEc:spr:nrmchp:978-0-387-72971-8_5
    DOI: 10.1007/978-0-387-72971-8_5
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    Cited by:

    1. Moss, Jonathan & Cacho, Oscar J., 2014. "Farm-scale analysis of the potential uptake of carbon offset activities," 2014 Conference, August 28-29, 2014, Nelson, New Zealand 187402, New Zealand Agricultural and Resource Economics Society.
    2. Bryan, Elizabeth & De Pinto, Alessandro & Ringler, Claudia & Asuming-Brempong, Samuel & Bendaoud, Luís Artur & Givá, Nicia & Anh, Dao The & Mai, Nguyen Ngoc & Asenso-Okyere, Kwadwo & Sarpong, Daniel, 2012. "Institutions for agricultural mitigation: Potential and challenges in four countries," CAPRi working papers 107, International Food Policy Research Institute (IFPRI).
    3. Cacho, Oscar J. & Lipper, Leslie & Moss, Jonathan, 2013. "Transaction costs of carbon offset projects: A comparative study," Ecological Economics, Elsevier, vol. 88(C), pages 232-243.

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