Impacts of the fairly priced REDD-based CO2 offset options on the electricity producers and consumers

Krasovskii AA, Khabarov N, & Obersteiner M (2014). Impacts of the fairly priced REDD-based CO2 offset options on the electricity producers and consumers. Economy of Region 3 (2014): 273-288.

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Abstract

This paper deals with the modeling of two sectors of a regional economy: electricity and forestry. We show that CO2 price will impact not only the profits of the CO2 emitting electricity producer (decrease), but also the electricity prices for the consumer (increase), and, hence, some financial instruments might be implemented today in order to be prepared for the uncertain CO2 prices in the future. We elaborate financial instrument based on the Reduced Emissions from Deforestation and Degradation (REDD+) mechanism. We model optimal behavior of forest owner and electricity producer under uncertainty and determine equilibrium fair prices of REDD-based-options.

Item Type: Article
Uncontrolled Keywords: CO2; REDD+; Option pricing; Optimization; Firm behavior; Cost minimizing; Uncertainty
Research Programs: Ecosystems Services and Management (ESM)
Bibliographic Reference: Economy of Region; 3(2014):273-288
Depositing User: IIASA Import
Date Deposited: 15 Jan 2016 08:50
Last Modified: 14 Sep 2016 08:41
URI: http://pure.iiasa.ac.at/10845

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