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dc.contributor.author
MacKenzie, Ian A.
dc.contributor.author
Ohndorf, Markus
dc.contributor.author
Palmer, Charles
dc.date.accessioned
2017-06-09T08:59:00Z
dc.date.available
2017-06-09T08:59:00Z
dc.date.issued
2010-09
dc.identifier.issn
2515-571
dc.identifier.uri
http://hdl.handle.net/20.500.11850/28949
dc.description.abstract
Opportunistic behaviour due to incomplete contract enforcement is a risk in many economic transactions such as forest carbon sequestration contracts. In this paper, an enforcement-proof incentive contract is developed in which a buyer demands a guaranteed delivery of a good or service given a productive upfront payment, moral hazard in precaution, and the potential for opportunistic contract breach. The optimal design of forest carbon contracts to ensure permanence is derived. Buyer liability for loss of a carbon sink is shown to yield an inefficiently low level of sequestration. Yet it remains higher than the case where liability is neither allocated to the buyer nor the seller. Indexing contract prices to the seller’s opportunity costs potentially boosts the upfront investment as does shifting liability to the seller but not beyond first-best levels. Assigning liability is shown to have implications for forest carbon contracts in an international climate policy regime.
dc.language.iso
en
dc.publisher
London School of Economics and Political Science (LSE)
dc.subject
Forest carbon offsets
dc.subject
Permanence
dc.subject
Contract design
dc.subject
Incomplete enforcement
dc.subject
Liability
dc.subject
Moral hazard
dc.title
Enforcement-proof contracts with moral hazard in precaution
dc.type
Working Paper
ethz.title.subtitle
Ensuring ‘permanence’ in carbon
ethz.journal.title
Grantham Research Institute on Climate Change and the Environment Working Paper
ethz.journal.volume
27
ethz.size
32 p.
ethz.notes
See also: http://e-citations.ethbib.ethz.ch/view/pub:70386.
ethz.publication.place
London
ethz.publication.status
published
ethz.leitzahl
ETH Zürich::00002 - ETH Zürich::00012 - Lehre und Forschung::00007 - Departemente::02045 - Dep. Geistes-, Sozial- u. Staatswiss. / Dep. of Humanities, Social and Pol.Sc.::03361 - Schubert, Renate / Schubert, Renate
ethz.leitzahl.certified
ETH Zürich::00002 - ETH Zürich::00012 - Lehre und Forschung::00007 - Departemente::02045 - Dep. Geistes-, Sozial- u. Staatswiss. / Dep. of Humanities, Social and Pol.Sc.::03361 - Schubert, Renate / Schubert, Renate
ethz.identifier.url
http://www2.lse.ac.uk/GranthamInstitute/publications/WorkingPapers/Abstracts/home.aspx
ethz.date.deposited
2017-06-09T08:59:21Z
ethz.source
ECIT
ethz.identifier.importid
imp59364d91ce43675074
ethz.ecitpid
pub:48294
ethz.eth
yes
ethz.availability
Metadata only
ethz.rosetta.installDate
2017-07-13T07:58:28Z
ethz.rosetta.lastUpdated
2018-10-01T11:01:50Z
ethz.rosetta.exportRequired
true
ethz.rosetta.versionExported
true
ethz.COinS
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