ECONOMIC AND POLITICAL FEASIBILITY OF INTERNATIONAL CARBON OFFSETS

Forests are important in the global carbon cycle, forming a major sink for carbon. Deforestation is a significant source of carbon dioxide emitted to the atmosphere. There is some scope to enhance natural carbon sinks, and therefore reduce net emissions of greenhouse gases, through afforestation and conservation of existing forests. Such initiatives may be implemented to ''offset'' emissions of greenhouse gases from other sources. This may be undertaken by private companies, or by governments as part of bilateral agreements or multilateral arrangements. International carbon offsets may be cost effective in terms of reduction of carbon emissions achieved, and may also be one way to mobilise private capital to fund forest conservation. It is argued here that theoretically the international offset of emissions may lead to a resource saving, and that forest conservation, as opposed to afforestation, may bring about many other benefits. However, such international contracts are unlikely to be feasible or make a major contribution to the control of greenhouse gases. The reasons for this are monitoring, enforcement and scientific uncertainties, and the implicit change in property rights involved in ''selling'' carbon sequestration rights.