Consequences of Co-benefits for the Efficient Design of Carbon Sequestration Programs, The
Hongli Feng, Catherine L. Kling
March 2005 [05-WP 390]
Feng, H. and C.L. Kling. 2005. "Consequences of Co-benefits for the Efficient Design of Carbon Sequestration Programs, The." Working paper 05-WP 390. Center for Agricultural and Rural Development, Iowa State University.
In this paper, we study the social efficiency of private carbon markets that include trading in agricultural soil carbon sequestration when there are significant co-benefits (positive environmental externalities) associated with the practices that sequester carbon. Likewise, we investigate the efficiency of government-run conservation programs that are designed to promote a broad array of environmental attributes (both carbon sequestration and its co-benefits) for the supply of carbon. Finally, policy design and efficiency issues associated with the potential interplay between a private carbon market and a government conservation program are studied. Empirical analyses for an area that represents a significant potential source of carbon sequestration and its associated co-benefits illustrate the magnitude and complexity of these issues in real-world policy design.
Keywords: average ranking of benefits, carbon markets, carbon sequestration, co-benefits, conservation programs, the Upper Mississippi River Basin.