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Realizing the social value of impermanent carbon credits

Author

Listed:
  • Balmford, Andrew
  • Keshav, Srinivasan
  • Venmans, Frank
  • Coomes, David
  • Groom, Ben
  • Madhavapeddy, Anil
  • Swinfield, Tom
Abstract
Efforts to avert dangerous climate change by conserving and restoring natural habitats are hampered by concerns over the credibility of methods used to quantify their long-term impacts. Here we develop a flexible framework for estimating the net social benefit of impermanent nature-based interventions that integrates three substantial advances: (1) conceptualizing the permanence of a project’s impact as its additionality over time; (2) risk-averse estimation of the social cost of future reversals of carbon gains; and (3) post-credit monitoring to correct errors in deliberately pessimistic release forecasts. Our framework generates incentives for safeguarding already credited carbon while enabling would-be investors to make like-for-like comparisons of diverse carbon projects. Preliminary analyses suggest nature-derived credits may be competitively priced even after adjusting for impermanence.

Suggested Citation

  • Balmford, Andrew & Keshav, Srinivasan & Venmans, Frank & Coomes, David & Groom, Ben & Madhavapeddy, Anil & Swinfield, Tom, 2023. "Realizing the social value of impermanent carbon credits," LSE Research Online Documents on Economics 120730, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:120730
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    File URL: http://eprints.lse.ac.uk/120730/
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    More about this item

    JEL classification:

    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General

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