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An efficient climate policy is based on cost-benefit analysis (CBA) and equates marginal abatement costs across all forcing agents affecting climate change. In CBA, the agents' contributions to radiative forcing (RF) must be consistently priced (i.e. the social cost of RF, occurring at a specific time, must be the same regardless of the agent causing it). We present a concept that enables doing so. The Social Cost of Forcing (SCF) is the monetary value of the social damage caused by marginal RF at a given instant (Wm − 2 ). Any forcing agent whose temporal decay profile and radiative efficiency are known can be priced based on it. Prices obtained for distinct agents are consistent in CBA, as long as the same SCF and discounting assumptions are applied. Hence, the SCF is a concise way to communicate social cost information: mutually consistent prices for any set of forcing agents can be obtained based on a single Integrated Assessment Model output, the SCF. We explain the theoretical foundations of the concept and illustrate its practical applications with two examples: (1) we derive SCF-based prices for CO 2 and CH 4 , and (2) we estimate the social cost of albedo changes in a boreal forest stand. [ABSTRACT FROM AUTHOR]

Forests provide many and large benefits, including cost-efficient climate change mitigation. However international carbon markets have not stimulated the demand for forestry offsets. Domestic market-mechanisms are emerging in many countries and forests could be highly valued through these policies as most of the benefits produced by forests are enjoyed locally. Here, a choice experiment explores drivers of valuation and willingness to pay for forest carbon services in voluntary markets in Mexico by comparing the valuation of citizens from four regions to test geographical preference for projects (n = 645). Findings from multinomial-logit models show valuation of forest carbon services is transferable and citizens would pay more for offsets from projects closer to their homes. Proximate forests provide a range of co-benefits to local users, including environmental services and opportunities for recreation. Factors related to valuation include sense of responsibility, previous knowledge of carbon emissions, previous visits to the sites, regional identification and the valuation of local environmental services (e.g. improvements in local air quality). Knowledge of spatial heterogeneity in valuation of the use of forest services can help to design market-based instruments by identifying highly valued areas for environmental services programs and carbon markets. [ABSTRACT FROM AUTHOR]

In cost-benefit analysis of climate policy there are two main approaches to discounting, each with implications conflicting with our moral intuitions. Thus, discounted utilitarianism implies that we hardly need to protect future generations against climate change, while classical utilitarianism implies that we should reduce our consumption across the board to benefit future generations. The insolubility of the debate derives from the fact that both classical and discounted utilitarianism permit only a single discount rate for all consequences occurring in the same future year, while our intuitions clearly do distinguish between consequences, depending on whether we cause adverse effects on other people's interests and violate their rights. Most people share the moral intuition that we ought to refrain from harming others, and ought to compensate them if we were unable to prevent harm. To regain a reflective equilibrium between such deontological intuitions and economic theory there is a need to accept different discount rates for different situations: a zero consumption discount rate in the case of cost-benefit analysis of measures to prevent wrongful harm to future generations, and standard discounting in all other cases. Applying a zero consumption discount rate means that future generations are automatically largely compensated for climate damage that remains unmitigated. [ABSTRACT FROM AUTHOR]

Abstract: This article challenges some of the assumptions underpinning the UN programme to Reduce Emissions from Deforestation and forest Degradation (REDD+) in developing countries. Firstly, it argues that the cost-effectiveness of REDD+ may have been exaggerated as current estimates ignore some cost categories as well as the evolution of drivers. Whilst REDD+ remains a ‘low-hanging fruit’ for climate mitigation, if all costs were included estimates would be at the high end of the currently accepted range. Secondly, the article highlights that REDD+ will be affected by a large funding gap at least until the entry into force of a new climate protocol in 2020. This gap is due as much to the poor status of public finances in donor countries as to the languishing state of carbon markets, and it calls for a revision of the assumptions regarding the design of the programme. Finally, it is advocated that, in order to contribute to the development of the programme, economic research on REDD+ should consider different policy options, assessing their efficiency and identifying measures that increase their cost-effectiveness. [Copyright &y& Elsevier]

Abstract: The land-use change and forestry sector can be a cost-effective contributor to climate mitigation in at least three ways: providing carbon offsets through carbon sequestration in biomass and soils, reducing emissions of methane and other greenhouse gases, and producing biofuels that replace fossil fuels. The presence of carbon markets should help encourage these activities; however, most carbon trades to date have occurred in the energy sector. A major obstacle to carbon trades from land-use systems is the presence of high transaction costs of converting a carbon offset into a tradable commodity, so the prevailing market carbon prices may not provide enough incentive for adoption. This paper presents a model of the exchange of carbon offsets between a project developer and a group of landholders. The model is solved to derive project feasibility frontiers that show the minimum number of contracts necessary to make a project feasible at any given carbon price. The model is applied to two case studies (smallholder agroforestry in Indonesia and partial reforestation of family farms in Australia) under two types of contract (purchase of carbon flows and rental of carbon stocks). The paper concludes by identifying possible strategies to reduce transaction costs while maintaining project integrity. [Copyright &y& Elsevier]

Abstract: Climate policy choices are influenced by the economics literature which analyses the costs and benefits of alternative strategies for climate action. This literature, in turn, rests on a series of choices about: the values and assumptions underlying the economic analysis; the methodologies for treating dynamics, technological change, risk and uncertainty; and the assumed interactions between economic systems, society and the environment, including institutional constraints on climate policy. We identify and discuss such critical issues, pushing at the boundaries of current climate economics research. New thinking in this area is gathering pace in response to the limitations of traditional economic approaches, and their assumptions on economic behaviour, ecological properties, and socio-technical responses. We place a particular emphasis on the role of induced technological change and institutional setups in shaping cost-effective climate action that also promotes economic development and the alleviation of poverty. [Copyright &y& Elsevier]

Abstract: The objective of this study is to analyze the economic viability of carbon-offset projects that avoid logging in Guyana''s forests. The results of this case study illustrate the cost effectiveness of alternative land-use options that reduce deforestation and associated greenhouse gas (GHG) emissions. This analysis demonstrates that using Guyana''s rainforests for climate change mitigation can generate equivalent revenue to that of conventional large-scale logging without detrimental environmental impacts. At a 12% discount rate, the break-even price for carbon is estimated to be about US$ 0.20/tC. This estimate falls toward the low range of carbon prices for existing carbon offset projects that avoid deforestation. [Copyright &y& Elsevier]