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Explaining The Price Of Voluntary Carbon Offsets

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Executive Summary

This paper investigates factors that explain the large variability in the price of voluntary carbon offsets. The authors estimate hedonic price functions using a variety of provider- and project-level characteristics as explanatory variables. They find that providers located in Europe sell offsets at prices that are approximately 30 percent higher than providers located in either North America or Australasia. Contrary to what one might expect, offset prices are generally higher, by roughly 20 percent, when projects are located in developing or least-developed nations. But this result does not hold for forestry-based projects. They find evidence that forestry-based offsets sell at lower prices, and the result is particularly strong when projects are located in developing or least-developed nations.

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