Trade-based carbon sequestration accounting.

This article describes and illustrates an accounting method to assess and compare "early" carbon sequestration investments and trades on the basis of the number of standardized CO2 emission offset credits they will provide. The "gold standard" for such credits is assumed to be a relatively riskless credit based on a CO2 emission reduction that provides offsets against CO2 emissions on a one-for-one basis. The number of credits associated with carbon sequestration needs to account for time, risk, durability, permanence, additionality, and other factors that future trade regulators will most certainly use to assign "official" credits to sequestration projects. The method that is presented here uses established principles of natural resource accounting and conventional rules of asset valuation to "score" projects. A review of 20 "early" voluntary United States based CO2 offset trades that involve carbon sequestration reveals that the assumptions that buyers, sellers, brokers, and traders are using to characterize the economic potential of their investments and trades vary enormously. The article develops a "universal carbon sequestration credit scoring equation" and uses two of these trades to illustrate the sensitivity of trade outcomes to various assumptions about how future trade auditors are likely to "score" carbon sequestration projects in terms of their "equivalency" with CO2 emission reductions. The article emphasizes the importance of using a standard credit scoring method that accounts for time and risk to assess and compare even unofficial prototype carbon sequestration trades. The scoring method illustrated in this article is a tool that can protect the integrity of carbon sequestration credit trading and can assist buyers and sellers in evaluating the real economic potential of prospective trades.

Development of indicators to assess economic vulnerabilities to changes in ecosystem services: case study of counties in Maryland, USA.

We develop indicators showing the relative environmental burdens that human activities place on locales for a given level of economic benefits. The main purpose is to develop tools that allow us to examine the potential vulnerabilities within economies to changes in resource conditions. The indicators of pollution emission or resource consumption per job can be used to identify potential challenges to resource and industry managers and to compare areas in terms of their ability to adapt to change. For example, if a large number of area jobs are dependent on abundant water, this indicates a vulnerability to a reduction in water availability for industrial use. We develop a case study for 23 counties and 1 city in Maryland to examine the usefulness and limitations of the indicators. Our case study demonstrates that the indicators provide an informative view into patterns of local economic activity and use of an area's environmental goods and services. In contrast to patterns for total environmental burdens (e.g., total SO2 emissions) that are typically reported, the rates of environmental burden per job are not simply correlated with high or low economic output. Thus, the indicators represent distinct patterns of environmental burdens per job that reflect reliance on environmental services. The indicators have some limitations when used at this fine scale because they can misrepresent conditions in counties in which economic sectors are dominated by one or a few businesses. For this reason, the indicators are best used as a regional screening tool.