Skip to main content
Unpublished Paper
Contracting for Impure Public Goods: Carbon Offsets and Additionality
Fondazione Eni Enrico Mattei Working Papers
  • Charles F. Mason, Department of Economics & Finance, University of Wyoming
  • Andrew J. Plantinga, Department of Agricultural and Resource Economics, Oregon State University
Date of This Version
Governments contracting with private agents for the provision of an impure public good must contend with agents who would potentially supply the good absent any payments. This additionality problem is centrally important in the use of carbon offsets as part of climate change mitigation. Analyzing optimal contracts for forest carbon sequestration, an important offset category, we conduct a national-scale simulation using results from an econometric model of land-use change. The results indicate that for an increase in forest area of 50 million acres, annual government expenditures with optimal contracts are about $4 billion lower compared than under a uniform subsidy.
Citation Information
Charles F. Mason and Andrew J. Plantinga. "Contracting for Impure Public Goods: Carbon Offsets and Additionality" (2011)
Available at: