Transaction cost implications of two approaches to forests in climate change policy: New Zealand and California

New Zealand and California present an opportunity to assess how two different designs for incorporating forests in climate policy affect transaction costs for participants in the forest sector. Forests play a prominent role in achieving the greenhouse gas (GHG) emissions reduction goals established by each policy. In New Zealand, the forest sector provides an important option for domestic GHG emissions reductions in an economy where opportunities in other sectors, like agriculture and energy, may be limited. In California, offsets from forests are projected to have the greatest technical potential of any approved offset project type, and will be an important option for reducing the costs of compliance in regulated sectors. This research investigates the different approaches taken by New Zealand and California, the circumstances surrounding each policy, and the transaction cost implications for forest participants under each programme.