Conference Agenda

We construct an analytical general equilibrium model of an economy with carbon offsets. We solve for closed-form solutions and find that raising the price of carbon offsets increases production in the clean sector while having an ambiguous effect on production in the dirty sector. Also, aggregate emissions may increase or decrease when the offset price increases. We then assess the model's results using two definitions of carbon offset additionality, and show that they are over-credited under most parameterizations relative to the aggregate emissions change they induce. Furthermore, additionality is not a sufficient statistic for welfare, and welfare is non-monotonic in additionality. Welfare effects depend on the relative size of the consumption good decrease versus the aggregate emissions change. Our results suggest that market spillover effects warrant consideration when evaluating carbon offset policies.

Forest carbon credits sit at the centre of EU climate plans ($-$310 MtCO$_{2}$e land removals by 2030 under the CRCF), just as the forest sink weakens and market confidence collapses. Familiar flaws—baseline inflation, weak additionality tests, fragmented standards—are compounded by two structural failures: impermanence and market leakage. Building large stocks raises reversal risk under climate-amplified disturbance; cutting local timber supply shifts harvesting elsewhere. Existing schemes treat these with thin, static buffers and partial leakage factors, so credited removals exceed atmospheric outcomes. We propose an issuance rule that prices risk ex ante via three adjustments: a Social Value of Offset weight for temporality and additionality; an empirically calibrated leakage deduction; and an experience-rated buffer sized to reversal hazard. Applied to ten forest management practices across European biomes, the framework yields a mean net issuance of just 19\% of verified in-situ benefits. Harvest-reducing practices (no harvesting, lengthened rotations, reduced thinning) retain only 2--7\% after leakage deductions of 51--76\%; harvest-neutral or supply-increasing practices (peatland restoration, species selection, afforestation) retain 12--41\%. Compared to existing European schemes, our risk-priced baseline implies integrity gaps of 50--66\%—the share of credits issued beyond what atmospheric outcomes would justify. Once time, displacement and loss are fully priced, usable credit volumes contract sharply.

Emissions trading programs have been promoted as efficient means to reduce nonpoint source water pollution and sequester carbon from agricultural land. While trading programs are often evaluated in isolation, they compete with longstanding agricultural conservation subsidy programs. Both programs target agroforestry practices that provide environmental benefits using different payment structures: Trading pays for performance while agricultural conservation programs pay for effort. We evaluate the performance of both programs in isolation and competition using an integrated assessment model that combines a stated preference survey of agricultural landowners for establishing forests with biophysical models of water quality and carbon sequestration benefits of forests. Our numerical policy simulation suggests that the water quality trading program in isolation can provide sufficient financial incentives for landowners to engage in afforestation activities on agricultural land. However, federal agricultural conservation subsidies largely crowd out the trading program when in competition. Stacking payments for carbon offsets with water quality trading payments does not enhance trading participation. Overall, the attractiveness and effectiveness of emissions trading programs for afforestation activities on agricultural land are heavily influenced by the presence and level of federal agricultural conservation subsidies.

This paper examines the effects of a climate adaptation policy on production and environmental outcomes in the context of Brazil's semiarid region, the country's poorest and most drought-prone region. The large-scale, low-cost water policy builds rainwater reservoirs designed to boost production and strengthen rural producers' resilience. Using a difference-in-differences approach and linking property-level administrative data to high-resolution satellite data, we find that cistern construction reallocates land toward higher-productivity uses. Results indicate an increase in cropland area by 7.6% and higher-quality pasture area by 14.5%, while lower-quality pasture area decreases by 3.2%. Forest cover increases by 1.1%, consistent with a land-saving effect driven by a reduction of lower-quality pasture. Effects hold across property sizes and are slightly larger in magnitude for small-sized properties. Our cost-benefit analysis reveals a positive aggregate return with each invested monetary unit generating 1.76 units of benefits, indicating that adaptation policies can also advance mitigation goals via forest preservation.