Modeling financial instruments supporting REDD

Krasovskii, A. ORCID: https://orcid.org/0000-0003-0940-9366, Khabarov, N. ORCID: https://orcid.org/0000-0001-5372-4668, & Obersteiner, M. ORCID: https://orcid.org/0000-0001-6981-2769 (2015). Modeling financial instruments supporting REDD. In: Proceedings, International Conference on Systems Dynamics and Control Processes (SDCP 2014). Eds. Maksimov, V.I. & Filippova, T.F., pp. 42-49 Ekaterinburg, Russia: Ural Federal University. ISBN 978-5-8295-0364-2

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Abstract

We propose and explore financial instruments supporting programs for reducing emissions from deforesttion and forest degradation (FI-REDD). A microeconomic framework allows for modeling interactions between forest owner (FO), electricity proucer (EP), and electricity consumer (EC). EP responds to increasing CO2 price by adjusting electricity quantities generated by different technologes and charging a higher electricity price to EC. EP can hedge against high CO2 price by employing FI-REDD. The modeling results indicate that FI-REDD might help avoid bankruptcy of CO2-intensive producers at high levels of CO2 price and therefore serve as a stabilization mechanism during transition of energy systems to greener technologies.

Item Type:	Book Section
Research Programs:	Ecosystems Services and Management (ESM)
Depositing User:	Luke Kirwan
Date Deposited:	15 Feb 2016 10:52
Last Modified:	27 Aug 2021 17:25
URI:	https://pure.iiasa.ac.at/11925

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