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While several economic studies have looked into the role of REDD in climate policy, the interlinks between climate policy, international trade and agricultural markets have been only marginally considered. This paper adds to that discussion by developing a policy simulation exercise in which REDD credits can be traded in an international carbon market using a recursive dynamic computable general equilibrium model. The model was extended to incorporate abatement cost curves of avoided deforestation from a partial equilibrium study, and to account for the corresponding induced effects on land and timber markets. We conclude that REDD may significantly reduce policy costs. A large number of REDD credits entering the carbon market would allow regions pertaining to the climate policy agreement to systematically emit above their targets. These results confirm that policy design may require limits to the use of REDD credits along with the creation of long-term incentives to promote a greener economy. Finally, when international competitiveness effects are taken into account, we show that the use of REDD as a means to foster developing countries' participation in climate policy may not be sufficient. [ABSTRACT FROM AUTHOR]

The efficient use of market-based policy instruments is an area of increasing importance as scholars and policymakers work to balance effective climate policy with economic growth. Carbon allowances and carbon offsets, despite being statutorily substitutable, behave in practice like imperfect substitutes. This paper provides a synthesis of extant work, market data and the regulatory frameworks of the world’s major carbon markets, and provides a comprehensive assessment of the drivers of demand for carbon offsets. It also provides a detailed assessment of the process through which international carbon offsets are produced, the UN’s Clean Development Mechanism. Demand for carbon offsets is heavily influenced by key programme design parameters that are specific to carbon market design and its implementation. These design parameters heavily influence the degree to which transaction costs, regulatory uncertainty and risk factor into the decisions of firms operating within the carbon trading programme. This paper also identifies key extra-statutory drivers that are outside of the policymaker’s control, which should be considered in both the policy design and the implementation process. This paper provides an instructive set of guiding criteria for policymakers and scholars for the design of future market-based environmental policy. [ABSTRACT FROM PUBLISHER]

This paper investigates how piloting programmes in China can promote local policy innovations. By using one of the piloting emission trading schemes (ETS) in Guangdong province as a case study, it is argued that the main features of the piloting experiments, particularly in the climate change domain, are largely different from previous local marketization experiments that dominate the reform period of China. Whereas previous experiments are often characterized as bottom-up or indigenous initiatives with strong patronage relations to the pro-reform politicians at central level, the current piloting programmes are often crafted in a top-down fashion that is often misaligned with local market or corporate interests. Hence, local policy innovations are designed, developed and brokered by the local state officers, in order to bridge this central–local interest gap. As a result, successful implementation of these policy innovations largely depends on local political traditions, bureaucratic culture and perceptions of distinctive development needs. [ABSTRACT FROM AUTHOR]

Almost two decades since the Kyoto Protocol was adopted, global greenhouse gas emissions are still rising rapidly. We argue that the global climate policy focus on carbon markets has played a significant role in the failure to reduce emissions. There are 16 compliance carbon markets in operation across the world. Many more are planned, although there have been numerous problems with carbon trading, including ineffectiveness, weak regulation and implementation, instances of fraud, little to no emissions reduction and major legitimacy issues for governments and the private sector. In this paper we take a “strong” position, arguing that carbon markets do not have a role to play in a policy scenario that requires radical emissions reductions in order to avoid dangerous greenhouse gas concentrations. We put forward 10 reasons why carbon markets should not be the preferred climate policy choice, which we have collated from positions taken by grassroots social movement organizations, think tanks, NGOs and other political advocacy groups as well as individual scientists and scholars. [ABSTRACT FROM PUBLISHER]