Fair pricing of REDD-based emission offsets under risk preferences and benefit sharing

11670 26 59294 3 165620 document 59294 IR-15-019.pdf application/pdf 40ef4fc016f775677f502a700495cd1a MD5 1523936 2016-06-01 14:34:11 https://pure.iiasa.ac.at/id/eprint/11670/1/IR-15-019.pdf 11670 1 1 application/pdf text en public cc_by

IR-15-019.pdf

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IR-15-019.pdf

http://eprints.org/relation/isVersionOf https://pure.iiasa.ac.at/id/document/59294 http://eprints.org/relation/isVolatileVersionOf https://pure.iiasa.ac.at/id/document/59294 http://eprints.org/relation/isCoversheetVersionOf https://pure.iiasa.ac.at/id/document/59294 archive 351 disk0/00/01/16/70 2016-01-15 08:54:16 2021-08-27 17:25:31 2016-01-15 08:54:16 monograph show 3 Krasovskii A. 8266 0000-0003-0940-9366 Khabarov N. 1850 0000-0001-5372-4668 Obersteiner M. 7255 0000-0001-6981-2769 Fair pricing of REDD-based emission offsets under risk preferences and benefit sharing pub iis_env prog_esm We consider risk-aware forest owners and electricity producers evaluating the Reduced Emissions from Deforestation and Degradation (REDD)-based offsets with a benefit-sharing mechanisms under uncertain CO2 prices. For a range of CO2 prices and respective risks perceived by the forest owner (seller) and electricity producer (buyer), we apply a model of fair (indifference) pricing. Parties' risk preferences are reflected by exponential utility functions. The potentially contracted amounts of REDD offsets are analyzed under various risk preferences and for different benefit sharing opportunities. Our results show that a risk-averse attitude considerably increases the contracted amounts of REDD offsets (compared to risk-neutral case) and, therefore, creates a higher potential for REDD implementation. We demonstrate possible situations, when parties could agree on a certain range of REDD contracts, e.g., smaller amounts of REDD offsets are traded for higher prices, and larger amounts - for lower prices, although contracting a moderate amount at a moderate price is impossible. The suggested benefit sharing mechanism can help increase contracted offset amounts. Our modeling results highlight two ways to promote higher REDD participation: (i) increasing risk aversion of the energy producers, and (ii) implementing the mechanism of benefit/risk sharing between the REDD consumer and supplier. 2015-11 published IR-15-019 IR-15-019 164 151 219 public interim_report IIASA, Laxenburg, Austria 24 FALSE info:eu-repo/semantics/book