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

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  • Benitez, Pablo C.
  • van Kooten, G. Cornelis

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.

Suggested Citation

  • Benitez, Pablo C. & van Kooten, G. Cornelis, 2005. "Carbon Sinks and Reservoirs: The Value of Permanence and Role of Discounting," Working Papers 37018, University of Victoria, Resource Economics and Policy.
    • Handle: RePEc:ags:uvicwp:37018
    DOI: 10.22004/ag.econ.37018
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    More about this item

    Keywords

    Environmental Economics and Policy; Resource /Energy Economics and Policy;

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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