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The Design and Implementation of US Climate Policy$
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Don Fullerton and Catherine Wolfram

Print publication date: 2012

Print ISBN-13: 9780226269146

Published to Chicago Scholarship Online: September 2013

DOI: 10.7208/chicago/9780226921983.001.0001

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PRINTED FROM CHICAGO SCHOLARSHIP ONLINE (www.chicago.universitypressscholarship.com). (c) Copyright University of Chicago Press, 2021. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in CHSO for personal use.date: 25 February 2021

The Economics of Carbon Offsets

The Economics of Carbon Offsets

(p.197) 12 The Economics of Carbon Offsets
The Design and Implementation of US Climate Policy

James B. Bushnell

Ryan Sandler

University of Chicago Press

This chapter discusses the potential of carbon offset mechanisms for reducing mitigation costs. Offset programs involve paying firms to reduce their greenhouse gas emissions rather than raising the costs of continuing to emit. The chapter discusses the institutional factors that cause enforcement problems, including two classic regulatory problems—moral hazard and adverse selection—and also considers the various policy tools which have been adopted to address the difficulties in offset market design.

Keywords:   carbon offsets, mitigation costs, greenhouse gas emissions, moral hazard, adverse selection, offset market design

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