Cooperation and Reciprocity in Carbon Sequestration Contracts
This paper studies the role of cooperation and reciprocity on the structure of self-enforcing carbon sequestration contracts. The optimal contract is derived as a result of the optimizing actions of purely self-interested agents, and agents that act according to social or egoistic preferences. The analysis finds that buyers' preferences do not affect contract structure unless the buyer is averse to inequality. In contrast, the optimal payment rule is directly related to the seller's preferences as the payment must motivate the seller to comply with forest conservation. It also finds that the presence of altruistic or warm glow preferences increases the likelihood of cooperation in the long-term relationship relative to the case of selfish parties. These results imply that agencies or organizations that are not only concerned about carbon sequestration but also have objectives related to the economic development of small land holders may be more successful in the implementation contracts to reduce emissions from deforestation and forest degradation.
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dig-okr-10986158802021-04-23T14:03:26Z Cooperation and Reciprocity in Carbon Sequestration Contracts Cordero Salas, Paula AFFORESTATION AMOUNT OF CREDITS ASYMMETRIC INFORMATION BIODIVERSITY BIODIVERSITY CONSERVATION BIOMASS BIOMASS CARBON BREACH BREACHES BUYER BUYERS CARBON CARBON CREDITS CARBON DIOXIDE CARBON EMISSION CARBON EMISSIONS CARBON EMISSIONS FROM DEFORESTATION CARBON LEVEL CARBON MARKET CARBON OFFSETS CARBON SEQUESTRATION CARBON SINK CARBON SINKS CARBON STOCK CARBON STOCKS CARBON STORAGE CLIMATE CLIMATE CHANGE CLIMATE CHANGE MITIGATION COMPENSATION CONSERVATION OF CARBON CONTRACT DESIGN CONTRACT ENFORCEMENT CONTRACT OBLIGATIONS CONTRACT OFFERS COOPERATIVE EQUILIBRIUM DESIGNING CONTRACTS DEVELOPING COUNTRIES DEVELOPING COUNTRY ECONOMIC ACTIVITY ECONOMIC DEVELOPMENT EMAIL ADDRESS EMISSIONS EMISSIONS ABATEMENT EMISSIONS FROM DEFORESTATION ENFORCEABILITY ENFORCEMENT CONSTRAINTS ENFORCEMENT MECHANISMS EQUILIBRIUM FINANCIAL SUPPORT FIXED COSTS FOREST FOREST CARBON FOREST CLEARING FOREST CONSERVATION FOREST COVER FOREST DEGRADATION FOREST LAND FOREST LANDS FOREST PROTECTION FORESTRY FORESTS GLOBAL CLIMATE CHANGE GOOD FAITH GREENHOUSE GREENHOUSE GAS GREENHOUSE GAS EMISSIONS HIDDEN INFORMATION HOLDING INCENTIVE COMPATIBILITY CONSTRAINT INCENTIVE COMPATIBILITY CONSTRAINTS INCOMPLETE CONTRACTS INDIVIDUAL RATIONALITY CONSTRAINT INDIVIDUAL RATIONALITY CONSTRAINTS INTERNATIONAL BANK LABOR MARKETS LAND HOLDER LAND HOLDERS LAND RIGHTS LAND USE LAND USES LEGALLY BINDING OBLIGATION LOCAL GOVERNMENTS LONG-TERM AGREEMENT MARKET OPPORTUNITY MATERIAL MONETARY PAYOFF MONETARY PAYOFFS OPEN ACCESS OPPORTUNITY COST OPTIMAL CONTRACT OPTIMAL CONTRACTS PARTICIPATION CONSTRAINT PARTNERSHIP PERFORMANCE INCENTIVES PERFORMANCE MEASURES POLITICAL ECONOMY PROOF OF PROPOSITION RELATIONAL CONTRACT RELATIONAL CONTRACTS REMEDIES REMUNERATION RENEGOTIATION RESULT RESULTS RETURN RETURNS RISK-NEUTRAL SAFETY NETS SELLER SELLERS TECHNICAL ISSUES THIRD PARTY TRADING TRUST FUND UNDER CONTRACT USES VALUATION WEB other-regarding preferences This paper studies the role of cooperation and reciprocity on the structure of self-enforcing carbon sequestration contracts. The optimal contract is derived as a result of the optimizing actions of purely self-interested agents, and agents that act according to social or egoistic preferences. The analysis finds that buyers' preferences do not affect contract structure unless the buyer is averse to inequality. In contrast, the optimal payment rule is directly related to the seller's preferences as the payment must motivate the seller to comply with forest conservation. It also finds that the presence of altruistic or warm glow preferences increases the likelihood of cooperation in the long-term relationship relative to the case of selfish parties. These results imply that agencies or organizations that are not only concerned about carbon sequestration but also have objectives related to the economic development of small land holders may be more successful in the implementation contracts to reduce emissions from deforestation and forest degradation. 2013-09-26T19:11:14Z 2013-09-26T19:11:14Z 2013-06 http://documents.worldbank.org/curated/en/2013/06/17940860/cooperation-reciprocity-carbon-sequestration-contracts http://hdl.handle.net/10986/15880 English en_US Policy Research Working Paper;No. 6521 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research |
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Banco Mundial |
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Estados Unidos |
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US |
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Bibliográfico |
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America del Norte |
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Biblioteca del Banco Mundial |
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English en_US |
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AFFORESTATION AMOUNT OF CREDITS ASYMMETRIC INFORMATION BIODIVERSITY BIODIVERSITY CONSERVATION BIOMASS BIOMASS CARBON BREACH BREACHES BUYER BUYERS CARBON CARBON CREDITS CARBON DIOXIDE CARBON EMISSION CARBON EMISSIONS CARBON EMISSIONS FROM DEFORESTATION CARBON LEVEL CARBON MARKET CARBON OFFSETS CARBON SEQUESTRATION CARBON SINK CARBON SINKS CARBON STOCK CARBON STOCKS CARBON STORAGE CLIMATE CLIMATE CHANGE CLIMATE CHANGE MITIGATION COMPENSATION CONSERVATION OF CARBON CONTRACT DESIGN CONTRACT ENFORCEMENT CONTRACT OBLIGATIONS CONTRACT OFFERS COOPERATIVE EQUILIBRIUM DESIGNING CONTRACTS DEVELOPING COUNTRIES DEVELOPING COUNTRY ECONOMIC ACTIVITY ECONOMIC DEVELOPMENT EMAIL ADDRESS EMISSIONS EMISSIONS ABATEMENT EMISSIONS FROM DEFORESTATION ENFORCEABILITY ENFORCEMENT CONSTRAINTS ENFORCEMENT MECHANISMS EQUILIBRIUM FINANCIAL SUPPORT FIXED COSTS FOREST FOREST CARBON FOREST CLEARING FOREST CONSERVATION FOREST COVER FOREST DEGRADATION FOREST LAND FOREST LANDS FOREST PROTECTION FORESTRY FORESTS GLOBAL CLIMATE CHANGE GOOD FAITH GREENHOUSE GREENHOUSE GAS GREENHOUSE GAS EMISSIONS HIDDEN INFORMATION HOLDING INCENTIVE COMPATIBILITY CONSTRAINT INCENTIVE COMPATIBILITY CONSTRAINTS INCOMPLETE CONTRACTS INDIVIDUAL RATIONALITY CONSTRAINT INDIVIDUAL RATIONALITY CONSTRAINTS INTERNATIONAL BANK LABOR MARKETS LAND HOLDER LAND HOLDERS LAND RIGHTS LAND USE LAND USES LEGALLY BINDING OBLIGATION LOCAL GOVERNMENTS LONG-TERM AGREEMENT MARKET OPPORTUNITY MATERIAL MONETARY PAYOFF MONETARY PAYOFFS OPEN ACCESS OPPORTUNITY COST OPTIMAL CONTRACT OPTIMAL CONTRACTS PARTICIPATION CONSTRAINT PARTNERSHIP PERFORMANCE INCENTIVES PERFORMANCE MEASURES POLITICAL ECONOMY PROOF OF PROPOSITION RELATIONAL CONTRACT RELATIONAL CONTRACTS REMEDIES REMUNERATION RENEGOTIATION RESULT RESULTS RETURN RETURNS RISK-NEUTRAL SAFETY NETS SELLER SELLERS TECHNICAL ISSUES THIRD PARTY TRADING TRUST FUND UNDER CONTRACT USES VALUATION WEB other-regarding preferences AFFORESTATION AMOUNT OF CREDITS ASYMMETRIC INFORMATION BIODIVERSITY BIODIVERSITY CONSERVATION BIOMASS BIOMASS CARBON BREACH BREACHES BUYER BUYERS CARBON CARBON CREDITS CARBON DIOXIDE CARBON EMISSION CARBON EMISSIONS CARBON EMISSIONS FROM DEFORESTATION CARBON LEVEL CARBON MARKET CARBON OFFSETS CARBON SEQUESTRATION CARBON SINK CARBON SINKS CARBON STOCK CARBON STOCKS CARBON STORAGE CLIMATE CLIMATE CHANGE CLIMATE CHANGE MITIGATION COMPENSATION CONSERVATION OF CARBON CONTRACT DESIGN CONTRACT ENFORCEMENT CONTRACT OBLIGATIONS CONTRACT OFFERS COOPERATIVE EQUILIBRIUM DESIGNING CONTRACTS DEVELOPING COUNTRIES DEVELOPING COUNTRY ECONOMIC ACTIVITY ECONOMIC DEVELOPMENT EMAIL ADDRESS EMISSIONS EMISSIONS ABATEMENT EMISSIONS FROM DEFORESTATION ENFORCEABILITY ENFORCEMENT CONSTRAINTS ENFORCEMENT MECHANISMS EQUILIBRIUM FINANCIAL SUPPORT FIXED COSTS FOREST FOREST CARBON FOREST CLEARING FOREST CONSERVATION FOREST COVER FOREST DEGRADATION FOREST LAND FOREST LANDS FOREST PROTECTION FORESTRY FORESTS GLOBAL CLIMATE CHANGE GOOD FAITH GREENHOUSE GREENHOUSE GAS GREENHOUSE GAS EMISSIONS HIDDEN INFORMATION HOLDING INCENTIVE COMPATIBILITY CONSTRAINT INCENTIVE COMPATIBILITY CONSTRAINTS INCOMPLETE CONTRACTS INDIVIDUAL RATIONALITY CONSTRAINT INDIVIDUAL RATIONALITY CONSTRAINTS INTERNATIONAL BANK LABOR MARKETS LAND HOLDER LAND HOLDERS LAND RIGHTS LAND USE LAND USES LEGALLY BINDING OBLIGATION LOCAL GOVERNMENTS LONG-TERM AGREEMENT MARKET OPPORTUNITY MATERIAL MONETARY PAYOFF MONETARY PAYOFFS OPEN ACCESS OPPORTUNITY COST OPTIMAL CONTRACT OPTIMAL CONTRACTS PARTICIPATION CONSTRAINT PARTNERSHIP PERFORMANCE INCENTIVES PERFORMANCE MEASURES POLITICAL ECONOMY PROOF OF PROPOSITION RELATIONAL CONTRACT RELATIONAL CONTRACTS REMEDIES REMUNERATION RENEGOTIATION RESULT RESULTS RETURN RETURNS RISK-NEUTRAL SAFETY NETS SELLER SELLERS TECHNICAL ISSUES THIRD PARTY TRADING TRUST FUND UNDER CONTRACT USES VALUATION WEB other-regarding preferences |
spellingShingle |
AFFORESTATION AMOUNT OF CREDITS ASYMMETRIC INFORMATION BIODIVERSITY BIODIVERSITY CONSERVATION BIOMASS BIOMASS CARBON BREACH BREACHES BUYER BUYERS CARBON CARBON CREDITS CARBON DIOXIDE CARBON EMISSION CARBON EMISSIONS CARBON EMISSIONS FROM DEFORESTATION CARBON LEVEL CARBON MARKET CARBON OFFSETS CARBON SEQUESTRATION CARBON SINK CARBON SINKS CARBON STOCK CARBON STOCKS CARBON STORAGE CLIMATE CLIMATE CHANGE CLIMATE CHANGE MITIGATION COMPENSATION CONSERVATION OF CARBON CONTRACT DESIGN CONTRACT ENFORCEMENT CONTRACT OBLIGATIONS CONTRACT OFFERS COOPERATIVE EQUILIBRIUM DESIGNING CONTRACTS DEVELOPING COUNTRIES DEVELOPING COUNTRY ECONOMIC ACTIVITY ECONOMIC DEVELOPMENT EMAIL ADDRESS EMISSIONS EMISSIONS ABATEMENT EMISSIONS FROM DEFORESTATION ENFORCEABILITY ENFORCEMENT CONSTRAINTS ENFORCEMENT MECHANISMS EQUILIBRIUM FINANCIAL SUPPORT FIXED COSTS FOREST FOREST CARBON FOREST CLEARING FOREST CONSERVATION FOREST COVER FOREST DEGRADATION FOREST LAND FOREST LANDS FOREST PROTECTION FORESTRY FORESTS GLOBAL CLIMATE CHANGE GOOD FAITH GREENHOUSE GREENHOUSE GAS GREENHOUSE GAS EMISSIONS HIDDEN INFORMATION HOLDING INCENTIVE COMPATIBILITY CONSTRAINT INCENTIVE COMPATIBILITY CONSTRAINTS INCOMPLETE CONTRACTS INDIVIDUAL RATIONALITY CONSTRAINT INDIVIDUAL RATIONALITY CONSTRAINTS INTERNATIONAL BANK LABOR MARKETS LAND HOLDER LAND HOLDERS LAND RIGHTS LAND USE LAND USES LEGALLY BINDING OBLIGATION LOCAL GOVERNMENTS LONG-TERM AGREEMENT MARKET OPPORTUNITY MATERIAL MONETARY PAYOFF MONETARY PAYOFFS OPEN ACCESS OPPORTUNITY COST OPTIMAL CONTRACT OPTIMAL CONTRACTS PARTICIPATION CONSTRAINT PARTNERSHIP PERFORMANCE INCENTIVES PERFORMANCE MEASURES POLITICAL ECONOMY PROOF OF PROPOSITION RELATIONAL CONTRACT RELATIONAL CONTRACTS REMEDIES REMUNERATION RENEGOTIATION RESULT RESULTS RETURN RETURNS RISK-NEUTRAL SAFETY NETS SELLER SELLERS TECHNICAL ISSUES THIRD PARTY TRADING TRUST FUND UNDER CONTRACT USES VALUATION WEB other-regarding preferences AFFORESTATION AMOUNT OF CREDITS ASYMMETRIC INFORMATION BIODIVERSITY BIODIVERSITY CONSERVATION BIOMASS BIOMASS CARBON BREACH BREACHES BUYER BUYERS CARBON CARBON CREDITS CARBON DIOXIDE CARBON EMISSION CARBON EMISSIONS CARBON EMISSIONS FROM DEFORESTATION CARBON LEVEL CARBON MARKET CARBON OFFSETS CARBON SEQUESTRATION CARBON SINK CARBON SINKS CARBON STOCK CARBON STOCKS CARBON STORAGE CLIMATE CLIMATE CHANGE CLIMATE CHANGE MITIGATION COMPENSATION CONSERVATION OF CARBON CONTRACT DESIGN CONTRACT ENFORCEMENT CONTRACT OBLIGATIONS CONTRACT OFFERS COOPERATIVE EQUILIBRIUM DESIGNING CONTRACTS DEVELOPING COUNTRIES DEVELOPING COUNTRY ECONOMIC ACTIVITY ECONOMIC DEVELOPMENT EMAIL ADDRESS EMISSIONS EMISSIONS ABATEMENT EMISSIONS FROM DEFORESTATION ENFORCEABILITY ENFORCEMENT CONSTRAINTS ENFORCEMENT MECHANISMS EQUILIBRIUM FINANCIAL SUPPORT FIXED COSTS FOREST FOREST CARBON FOREST CLEARING FOREST CONSERVATION FOREST COVER FOREST DEGRADATION FOREST LAND FOREST LANDS FOREST PROTECTION FORESTRY FORESTS GLOBAL CLIMATE CHANGE GOOD FAITH GREENHOUSE GREENHOUSE GAS GREENHOUSE GAS EMISSIONS HIDDEN INFORMATION HOLDING INCENTIVE COMPATIBILITY CONSTRAINT INCENTIVE COMPATIBILITY CONSTRAINTS INCOMPLETE CONTRACTS INDIVIDUAL RATIONALITY CONSTRAINT INDIVIDUAL RATIONALITY CONSTRAINTS INTERNATIONAL BANK LABOR MARKETS LAND HOLDER LAND HOLDERS LAND RIGHTS LAND USE LAND USES LEGALLY BINDING OBLIGATION LOCAL GOVERNMENTS LONG-TERM AGREEMENT MARKET OPPORTUNITY MATERIAL MONETARY PAYOFF MONETARY PAYOFFS OPEN ACCESS OPPORTUNITY COST OPTIMAL CONTRACT OPTIMAL CONTRACTS PARTICIPATION CONSTRAINT PARTNERSHIP PERFORMANCE INCENTIVES PERFORMANCE MEASURES POLITICAL ECONOMY PROOF OF PROPOSITION RELATIONAL CONTRACT RELATIONAL CONTRACTS REMEDIES REMUNERATION RENEGOTIATION RESULT RESULTS RETURN RETURNS RISK-NEUTRAL SAFETY NETS SELLER SELLERS TECHNICAL ISSUES THIRD PARTY TRADING TRUST FUND UNDER CONTRACT USES VALUATION WEB other-regarding preferences Cordero Salas, Paula Cooperation and Reciprocity in Carbon Sequestration Contracts |
description |
This paper studies the role of
cooperation and reciprocity on the structure of
self-enforcing carbon sequestration contracts. The optimal
contract is derived as a result of the optimizing actions of
purely self-interested agents, and agents that act according
to social or egoistic preferences. The analysis finds that
buyers' preferences do not affect contract structure
unless the buyer is averse to inequality. In contrast, the
optimal payment rule is directly related to the
seller's preferences as the payment must motivate the
seller to comply with forest conservation. It also finds
that the presence of altruistic or warm glow preferences
increases the likelihood of cooperation in the long-term
relationship relative to the case of selfish parties. These
results imply that agencies or organizations that are not
only concerned about carbon sequestration but also have
objectives related to the economic development of small land
holders may be more successful in the implementation
contracts to reduce emissions from deforestation and forest degradation. |
format |
Publications & Research :: Policy Research Working Paper |
topic_facet |
AFFORESTATION AMOUNT OF CREDITS ASYMMETRIC INFORMATION BIODIVERSITY BIODIVERSITY CONSERVATION BIOMASS BIOMASS CARBON BREACH BREACHES BUYER BUYERS CARBON CARBON CREDITS CARBON DIOXIDE CARBON EMISSION CARBON EMISSIONS CARBON EMISSIONS FROM DEFORESTATION CARBON LEVEL CARBON MARKET CARBON OFFSETS CARBON SEQUESTRATION CARBON SINK CARBON SINKS CARBON STOCK CARBON STOCKS CARBON STORAGE CLIMATE CLIMATE CHANGE CLIMATE CHANGE MITIGATION COMPENSATION CONSERVATION OF CARBON CONTRACT DESIGN CONTRACT ENFORCEMENT CONTRACT OBLIGATIONS CONTRACT OFFERS COOPERATIVE EQUILIBRIUM DESIGNING CONTRACTS DEVELOPING COUNTRIES DEVELOPING COUNTRY ECONOMIC ACTIVITY ECONOMIC DEVELOPMENT EMAIL ADDRESS EMISSIONS EMISSIONS ABATEMENT EMISSIONS FROM DEFORESTATION ENFORCEABILITY ENFORCEMENT CONSTRAINTS ENFORCEMENT MECHANISMS EQUILIBRIUM FINANCIAL SUPPORT FIXED COSTS FOREST FOREST CARBON FOREST CLEARING FOREST CONSERVATION FOREST COVER FOREST DEGRADATION FOREST LAND FOREST LANDS FOREST PROTECTION FORESTRY FORESTS GLOBAL CLIMATE CHANGE GOOD FAITH GREENHOUSE GREENHOUSE GAS GREENHOUSE GAS EMISSIONS HIDDEN INFORMATION HOLDING INCENTIVE COMPATIBILITY CONSTRAINT INCENTIVE COMPATIBILITY CONSTRAINTS INCOMPLETE CONTRACTS INDIVIDUAL RATIONALITY CONSTRAINT INDIVIDUAL RATIONALITY CONSTRAINTS INTERNATIONAL BANK LABOR MARKETS LAND HOLDER LAND HOLDERS LAND RIGHTS LAND USE LAND USES LEGALLY BINDING OBLIGATION LOCAL GOVERNMENTS LONG-TERM AGREEMENT MARKET OPPORTUNITY MATERIAL MONETARY PAYOFF MONETARY PAYOFFS OPEN ACCESS OPPORTUNITY COST OPTIMAL CONTRACT OPTIMAL CONTRACTS PARTICIPATION CONSTRAINT PARTNERSHIP PERFORMANCE INCENTIVES PERFORMANCE MEASURES POLITICAL ECONOMY PROOF OF PROPOSITION RELATIONAL CONTRACT RELATIONAL CONTRACTS REMEDIES REMUNERATION RENEGOTIATION RESULT RESULTS RETURN RETURNS RISK-NEUTRAL SAFETY NETS SELLER SELLERS TECHNICAL ISSUES THIRD PARTY TRADING TRUST FUND UNDER CONTRACT USES VALUATION WEB other-regarding preferences |
author |
Cordero Salas, Paula |
author_facet |
Cordero Salas, Paula |
author_sort |
Cordero Salas, Paula |
title |
Cooperation and Reciprocity in Carbon Sequestration Contracts |
title_short |
Cooperation and Reciprocity in Carbon Sequestration Contracts |
title_full |
Cooperation and Reciprocity in Carbon Sequestration Contracts |
title_fullStr |
Cooperation and Reciprocity in Carbon Sequestration Contracts |
title_full_unstemmed |
Cooperation and Reciprocity in Carbon Sequestration Contracts |
title_sort |
cooperation and reciprocity in carbon sequestration contracts |
publisher |
World Bank, Washington, DC |
publishDate |
2013-06 |
url |
http://documents.worldbank.org/curated/en/2013/06/17940860/cooperation-reciprocity-carbon-sequestration-contracts http://hdl.handle.net/10986/15880 |
work_keys_str_mv |
AT corderosalaspaula cooperationandreciprocityincarbonsequestrationcontracts |
_version_ |
1756573104234037248 |