Cite as:
Knoke, T.; Steinbeis, O.; B&ouml;sch, M.; Roman-Cuesta, R.M. &amp; Burkhardt, T. (2011): <b>Cost-effective compensation to avoid carbon emissions from forest loss: An approach to consider price?quantity effects and risk-aversion</b>. <i>Ecological Economics </i> <b>70</b>, 1139-1153.

Resource Description

Title: Cost-effective compensation to avoid carbon emissions from forest loss: An approach to consider price?quantity effects and risk-aversion
FOR816dw ID: 980
Publication Date: 2011-04-28
License and Usage Rights:
Resource Owner(s):
Individual: Thomas Knoke
Individual: Otto-Emmanuel Steinbeis
Individual: Matthias Bösch
Individual: Rosa Maria Roman-Cuesta
Individual: Thomas Burkhardt
Analyses were carried out on financial compensation to avoid loss of tropical forests and related carbon (C)<br/> emissions when marginal financial yield declined for land-use options with extended areas, and when a riskaverting<br/> perspective (modeled according to financial theory around the capital asset pricing model) is<br/> assumed. The approach in this study was to consider natural forest, forest plantation, pasture, and cropland<br/> simultaneously to investigate how an optimized land-use distribution may reduce the amount of<br/> compensation necessary to avoid C emissions from forest loss.<br/> The financial compensations derived were as high as US$ 176 per hectare per year when comparing natural<br/> forests only with the most profitable alternative (croplands). However, compensation decreased to US$ 124<br/> for risk-neutral decision-makers, who would strive for optimized land-use allocation, and to only US$ 47 per<br/> hectare per year for risk-avoiders, who would look to maximize the reward-to-variability ratio. Sensitivity<br/> analyses indicated that the compensation under risk-aversion increased much less than under risk-ignoring<br/> when increased productivity of agricultural land-use or growing demand for agricultural products was<br/> simulated. It was concluded that considering appropriate diversification strategies and the well documented<br/> human behavior to avoid risks is an important step in developing cost-effective compensation policies.
| uncertainty | risk aversion | carbon compensation | land diversification | financial modeling of land-use shares | endogeneity of tropical land-use | indirect land use change (ILUC) |
Literature type specific fields:
Journal: Ecological Economics
Volume: 70
Page Range: 1139-1153
Publisher: Elsevier
Metadata Provider:
Individual: Bernhard Runzheimer
Online Distribution:
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