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Discounting Offsets: Issues and Options

This paper describes the different types of discounting, their objectives and their potential impacts on carbon markets.

Anja Kollmuss, Michael Lazarus / Published on 8 October 2010
Citation

Kollmuss, A., Lazarus, M., Smith, G. (2010). Discounting Offsets: Issues and Options. Kollmuss, A., M. Lazarus, G. Smith (2010). Discounting offsets: Issues and options. SEI working paper: WP-US-1005.

Discount factors can be used to strengthen the environmental integrity of offsets and to give preference to certain projects types or geographic regions. All discounting approaches face the difficulty of having to establish the right discount rate that is politically acceptable, maximizes benefits and minimizes negative effects.

While discounting is no silver bullet – its potential pitfalls are significant – it should be considered by policymakers as a mechanism to address specific objectives, in particular to remedy perverse incentives and to maximize the environmental benefit of offset markets.

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SEI authors

Profile picture of Anja Kollmuss
Anja Kollmuss

SEI Affiliated Researcher

SEI US

Michael Lazarus
Michael Lazarus

Senior Scientist

SEI US

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