Abstract
This article provides an overview of the issues and challenges involved in analyzing the costs and program design for carbon sequestration. The first section examines some of the pitfalls of comparing the results of carbon sequestration cost studies and suggests some simple ways in which analysts could make their results more useful. The pitfalls in comparing studies include different definitions for the summary statistic “dollars per ton,” differences in the type of costs that are estimated, and differences in underlying assumptions regarding program design and implementation. Future cost studies will benefit from improved treatment of leakage, general equilibrium interactions, and public finance interactions. The second section reviews issues related to the implementation of a carbon sequestration program, including which policy tools are available and which have received the most attention, some of the challenges for using those policy tools, and one alternative that has received little attention, but may become necessary. The discussion also provides an overview and analysis of the bills introduced in the last two congresses and considers the general policy implications of those proposals.
Similar content being viewed by others
Literature Cited
R. Adams D. Adams J. Callaway C. Chang B. McCarl (1993) ArticleTitleSequestering carbon on agricultural land: Social cost and impacts on timber markets Contemporary Policy Issues XI(1 76–87
D. Adams R. Alig B. McCarl J. Callaway S. Winnett (1999) ArticleTitleMinimum cost strategies for sequestering carbon in forests Land Economics 75(3) 360–374
R. Alig D. Adams B. McCarl (1998) ArticleTitleEcological and economic impacts of forest policies: Interactions across forestry and agriculture Ecological Economics 27(1998) 63–78 Occurrence Handle10.1016/S0921-8009(97)00129-8
R. Alig D. Adams B. McCarl J.M. Callaway S. Winnett (1997) ArticleTitleAssessing effects of mitigation strategies for global climate change with an intertemporal model of the U.S. forest and agriculture sectors Environmental and Resource Economics 9 259–274 Occurrence Handle10.1023/A:1026409105660
K. Andersson K. Richards (2001) ArticleTitleImplementing an international carbon sequestration program: Can the leaky sink be fixed Climate Policy 1(2001) 173–188 Occurrence Handle10.1016/S1469-3062(01)00004-3
Antle, J., S. Capalbo, S. Mooney, E. Elliott, and K. Paustian. 2002. Spatial heterogenity, contract design, and the efficiency of carbon sequestration policies for agriculture. Draft paper available from authors.
Aukland, L., P. Moura Costa, S. Brown. 2001. A conceptual framework for addressing leakage on avoided deforestation projects. At Available from www.ecosecurities.com/download/Aukland M Costa+S Brown Leakage.pdf.)
D. Cole P. Grossman (1999) ArticleTitleWhen is command-and-control efficient? Institutions, technology, and the comparative efficiency of alternative regimes for environmental protection Wisconsin Law Review 1999 887–938
D. Dudek A. LeBlanc (1990) ArticleTitleOffsetting new CO2 emissions: A rational first greenhouse policy step Contemporary Policy Issues 8 29–42
Goulder, L. 1994. Environmental taxation and the “double dividend”: A reader’s guide. Paper prepared for the International Institute of Public Finance 50th Congress, “Public Finance, Environment, and Natural Resources.”
L. Goulder I. Parry D. Burtraw (1997) ArticleTitleRevenue-raising versus other approaches to environmental protection: The critical significance of preexisting tax distortions RAND Journal of Economics 28(4) 708–731
L. Goulder I. Parry R. Williams SuffixIII D. Burtraw (1998) The cost-effectiveness of alternative instruments for environmental protection in a second-best setting Resources for the Future Working Paper Washington DC
Kerr, S., S. Brown, J. Hendy, S Liu, A. Pfaff, and A. Sanchez. 2003a. Tropical forest protection, uncertainty, and the environmental integrity of carbon mitigation policies. Draft paper available from authors.
Kerr, S., A. Pfaff, and G. Sanchez-Azofeifa. 2003b. Development and deforestation: Evidence from Costa Rica. Draft paper available from authors.
Lal, R., J. M. Kimble, R. F. Follett, and C. V. Cole. 1998. The potential of U.S. cropland to sequester carbon and mitigate the greenhouse effect. Sleeping Bear Press.
S. Matthews R. O’Connor A. Plantinga (2002) ArticleTitleQuantifying the impacts on biodiversity of policies for carbon sequestration in forests Ecological Economics. 40(1) 71–87 Occurrence Handle10.1016/S0921-8009(01)00269-5
McCarl, B., B. Murray, and U. Schneider. 2001. Jointly estimating carbon sequestration supply from forests and agriculture. Paper prepared for Western Economics Association Meetings.
R. Moulton K. Richards (1990) Costs of sequestering carbon through tree planting and forest management in the United States. General Technical Report WO-58 US Department of Agriculture Washington, DC
Murray, B., B. McCarl, and H. Lee. 2003. Estimating leakage from forest carbon sequestration programs. Land Economics.
InstitutionalAuthorNameNew York State Energy Office (1991) Analysis of carbon reduction in New York State. Report of the New York State Energy Office, in consultation with NYS Department of Environmental Conservation and NYS Department of Public Service NYS Energy Office Albany, New York
R. Newell R. Stavins (2000) ArticleTitleClimate change and forest sinks: Factors affecting the costs of carbon sequestration Journal of Environmental Economics and Management 40(3) 211–235 Occurrence Handle10.1006/jeem.1999.1120
W. Nordhaus J Boyer (2000) Warming the world: Economic models of global warming MIT Press Cambridge, Massachusetts
I. Parry (1995a) ArticleTitlePollution taxes and revenue recycling Journal of Environmental Economics and Management 29 S64–S77 Occurrence Handle10.1006/jeem.1995.1061
I. Parry (1995b) ArticleTitleOptimal pollution taxes and endogenous technological progress Resource and Energy Economics 17 69–85 Occurrence Handle10.1016/0928-7655(94)00010-H
I. Parry (1997a) ArticleTitleEnvironmental taxes and quotas in the presence of distorting taxes in factor markets Resource and Energy Economics 19 203–220 Occurrence Handle10.1016/S0928-7655(96)00012-7
I. Parry (1997b) ArticleTitleReducing carbon emissions: Interactions with the tax system raise the cost Resources for the Future 128 9–12
I. Parry (1998) ArticleTitleA second-best analysis of environmental subsidies International Tax and Public Finance 5 153–170 Occurrence Handle10.1023/A:1008638320593
Pfaff, A. 2003. What would have happened? Reviewing and improving estimated baselines for tropical forests and sequestered carbon. Draft paper available from authors.
Plantinga, A. and T. Mauldin. 2000. A method for estimating the cost of CO2 mitigation through afforestation. Draft paper available from authors.
A. Plantinga T. Mauldin D. Miller (1999) ArticleTitleAn econometric analysis of the costs of sequestering carbon in forests American Journal of Agricultural Economics 81(4) 812–824
A. Plantinga J. Wu (2003) ArticleTitleCo-benefits from carbon sequestration in forests: An evaluation of the reductions in agricultural externalities from an afforestation policy in Wisconsin Land Economics 79(1) 74–85
Richards, K. 1997a. Estimating costs of carbon sequestration for a United States greenhouse gas policy. Report prepared for Charles River Associates.
K. Richards (1997b) ArticleTitleThe time value of carbon in bottom-up studies Critical Reviews in Environmental Science and Technology 27 S279–S292 Occurrence Handle1:CAS:528:DyaK1cXnvVOjtg%3D%3D
K. Richards (2000) ArticleTitleFraming environmental policy instrument choice Duke Environmental Law and Policy Forum X 221–285
K. Richards K. Andersson (2001) ArticleTitleThe leaky sink: Persistent obstacles to a forest carbon sequestration program based on individual projects Climate Policy I(2001) 41–54 Occurrence Handle10.1016/S1469-3062(00)00003-6
Richards, K., and C. Stokes. 2003. A review of carbon sequestration cost studies: A dozen years of research. Climatic Change in press.
K. Richards R. Moulton R. Birdsey (1993) ArticleTitleCosts of creating carbon sinks in the U.S Energy Conservation and Management 34(9–11) 905–912 Occurrence Handle10.1016/0196-8904(93)90035-9
D. Sappington J. Stiglitz (1986) ArticleTitlePrivatization, information, and incentives Journal of Policy Analysis and Management 6 567–581
Sedjo, R., and A. Solomon. 1989. In P. Crosson, J. Darmstadter, W. Easterling, and N. Rosenberg (eds.). Greenhouse warming: Abatement and adaptation. RFF Proceedings, pp. 110–119.
Sedjo, R., B. Sohngen, and R. Mendelsohn. 2001. Estimating carbon supply curves for global forests and other land uses. Resources for the Future Discussion Paper 01–19, Washington DC.
B. Sohngen R. Mendelsohn (2001) ArticleTitleOptimal forest carbon sequestration American Journal of Agricultural Economics 85(2) 448–457
R. Stavins (1999) ArticleTitleThe costs of carbon sequestration: A revealed-preference approach American Economic Review 89 994–1009
G. van Kooten L. Arthur W. Wilson (1992) ArticleTitlePotential to sequester carbon in Canadian forests: Some economic considerations Canadian Public Policy XVIII(2) 127–138
O. Williamson (1985) The economic institutions of capitalism The Free Press New York
Author information
Authors and Affiliations
Rights and permissions
About this article
Cite this article
Richards, K. A Brief Overview of Carbon Sequestration Economics and Policy. Environmental Management 33, 545–558 (2004). https://doi.org/10.1007/s00267-003-9111-8
Published:
Issue Date:
DOI: https://doi.org/10.1007/s00267-003-9111-8