Biological Carbon Sinks: Transaction Costs and Governance

G.C. van Kooten

Research output: Contribution to journalArticleAcademicpeer-review

8 Citations (Scopus)


Activities that remove CO2 from the atmosphere and store it in forest and agricultural ecosystems can generate CO2-offset credits that can thus substitute for CO2 emissions reduction. Are biological CO2-uptake activities competitive with CO2 offsets from reduced fossil fuel use? In this paper, it is argued that transaction costs impose a formidable obstacle to direct substitution of carbon uptake offsets for emissions reduction in trading schemes, and that separate caps should be set for emissions reduction and sink-related activities. While a tax/subsidy scheme is preferred to emissions trading for incorporating biologically generated CO2 offsets, contracts that focus on the activity, and not the amount of carbon sequestered, are most likely to lead to the lowest transaction costs.
Original languageEnglish
Pages (from-to)372-376
JournalForestry Chronicle
Issue number3
Publication statusPublished - 2009

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