The Economics of Carbon Offsets
16 Pages Posted: 30 Aug 2010 Last revised: 20 Jan 2023
Date Written: August 2010
Although international programs for carbon offsets play an important role in current and prospective climate-change policy, they continue to be very controversial. Asymmetric information creates several incentive problems, include adverse selection and moral hazard, in offset markets. The current regulatory focus on additionality tends to paint all these problems with a broad brush without proper consideration of the context or their implications.
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