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Rent Seeking and the Smoke and Mirrors Game in the Creation of Forest Sector Carbon Credits: An Example from British Columbia

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  • G. Cornelis van Kooten
  • Tim Bogle
  • Frans P. de Vries

Abstract

From a cost standpoint and as demonstrated in this paper, it is beneficial to permit forest-sector carbon offsets in lieu of carbon dioxide emissions reduction. Such offsets play a role in voluntary markets and Europe’s Emission Trading System. However, problems related to additionality, leakages, duration and impermanence, high transaction costs, and governance raise important questions about the validity of most carbon offset credits from forestry. Using data for a forest estate in south-eastern British Columbia owned by the Natural Conservancy of Canada (NCC), we construct a forest management model to demonstrate that the planned NCC management program yields questionable forest carbon offsets. NCC management results in slightly less annual carbon sequestration than leaving the forest as wilderness, but sustainable commercial management of the site sequesters between 8 and 270 thousand tonnes of CO2 more per year than NCC management. Because commercial exploitation was the counterfactual used to justify the NCC carbon offsets, offsets were subsequently sold to non-arms-length buyers, and numbers of carbon offsets are highly sensitive to assumptions, one can only conclude that the carbon offsets generated by this (and probably many other) forest conservation projects are simply spurious.

Suggested Citation

  • G. Cornelis van Kooten & Tim Bogle & Frans P. de Vries, 2012. "Rent Seeking and the Smoke and Mirrors Game in the Creation of Forest Sector Carbon Credits: An Example from British Columbia," Working Papers 2012-06, University of Victoria, Department of Economics, Resource Economics and Policy Analysis Research Group.
    • Handle: RePEc:rep:wpaper:2012-06
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    References listed on IDEAS

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    Cited by:

    1. Meine Noordwijk & Fahmuddin Agus & Sonya Dewi & Herry Purnomo, 2014. "Reducing emissions from land use in Indonesia: motivation, policy instruments and expected funding streams," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 19(6), pages 677-692, August.
    2. G. Cornelis van Kooten & Craig Johnston & Zhen Xu, 2012. "Economics of Forest Carbon Sequestration," Working Papers 2012-04, University of Victoria, Department of Economics, Resource Economics and Policy Analysis Research Group.

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    More about this item

    Keywords

    climate change and forestry; forest carbon offsets; forest conservation; REDD;
    All these keywords.

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q23 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Forestry
    • P28 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Natural Resources; Environment

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