Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/324805 
Year of Publication: 
2025
Series/Report no.: 
EGC Discussion Papers No. 1112
Publisher: 
Yale University, Economic Growth Center, New Haven, CT
Abstract: 
We study carbon offsets sold by firms in China under the Clean Development Mechanism (CDM). We find that offset-selling firms, meant to cut carbon emissions, instead increase them by 49% after starting an offset project. In a model of firm investment decisions and offset review, we estimate that CDM firms increase emissions due to both the selection of higher-growth firms into projects (35 pp) and because offset projects themselves boost firm growth and therefore emissions (14 pp). The CDM reduces global surplus by causing damages from increased emissions four times greater than private gains from trade in the offset market.
Document Type: 
Working Paper

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