Transaction costs of forest carbon projects
Mary Milne
This report provides some preliminary estimates of transaction costs, especially
to project developers and investors and outlines the steps involved in establishing
and implementing a number of forest-carbon projects. In order to provide more
comprehensive policy recommendations on how to minimise transaction costs, more
analysis is required on the distribution of transaction costs between the stakeholders.
Currently, this type of study is constrained by the lack of an international
carbon market, the early stages at which most projects are, and the limited
number of forest-carbon projects in operation. As the carbon market develops,
more operational entities are likely to enter, resulting in reduced transaction
costs for individual projects. In terms of the size of transaction costs in
the carbon market, this will depend on the institutional capacity and policy
environment of both Annex 1 and host countries, and the establishment of new
institutions to provide services currently implemented by individual projects
and their partners.