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Voluntary carbon markets: A critical assessment

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  • Meitner, Leonhard

Abstract

The looming climate crisis calls for the development of novel forms of response, but so far, climate change action does not meet its ambitions to tackle the issue. Voluntary Carbon Markets (VCMs) are one proposed solution to bridge the gap. However, VCMs are criticized for not providing real climate benefits and exacerbating inequality. This paper critically assesses VCMs, focusing on their regulatory, ecological, and social dysfunctions through an ecological economics lens. It identifies key issues such as inadequate transparency, compromised environmental integrity due to issues of additionality, permanence, double counting, carbon leakage, rebound effects, and adverse social impacts. By analyzing these dysfunctions and the underlying theoretical assumptions, the paper highlights how power relations, fundamental uncertainties, information asymmetries, and the commodification of nature contribute to the observed problems in VCMs. Through a qualitative literature analysis, this research provides a comprehensive evaluation of VCMs' role in global climate policy, emphasizing the need for robust regulatory frameworks, transparency, and inclusive decision-making processes to enhance their efficacy. The findings suggest that while VCMs have potential, addressing their inherent limitations is crucial for their legitimacy and effectiveness in combating climate change.

Suggested Citation

  • Meitner, Leonhard, 2024. "Voluntary carbon markets: A critical assessment," IPE Working Papers 246/2024, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
  • Handle: RePEc:zbw:ipewps:308040
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    References listed on IDEAS

    as
    1. Montgomery, W. David, 1972. "Markets in licenses and efficient pollution control programs," Journal of Economic Theory, Elsevier, vol. 5(3), pages 395-418, December.
    2. Hanna-Mari Ahonen & Juliana Kessler & Axel Michaelowa & Aglaja Espelage & Stephan Hoch, 2022. "Governance of Fragmented Compliance and Voluntary Carbon Markets Under the Paris Agreement," Politics and Governance, Cogitatio Press, vol. 10(1), pages 235-245.
    3. Régis Martineau & Jean-Philippe Lafontaine, 2019. "When carbon accounting systems make us forget nature: from commodification to reification," Sustainability Accounting, Management and Policy Journal, Emerald Group Publishing Limited, vol. 11(3), pages 487-504, June.
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    More about this item

    Keywords

    Voluntary carbon markets; carbon offsetting; regulatory frameworks; ecological economics; environmental integrity;
    All these keywords.

    JEL classification:

    • F64 - International Economics - - Economic Impacts of Globalization - - - Environment
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q57 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Ecological Economics
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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