Hello InVEST community,
I am working with the carbon storage and sequestration model . I have a question regarding the market discount in price and the annual rate of change in the price of carbon.
I can’t find any article or paper specifying the value of these topics, can someone indicate some way to find it? Thanks already
Market carbon prices should ideally come from an existing carbon exchange. There are a wide array of approaches for forecasting future prices in any market, and carbon exchanges are no different. This paper has a nice introduction that gives you a sense of the variety. If you end up using a more exotic approach than a simple rate of change, then remember that you can still use the carbon price table input instead, where you specify prices for each year (from whatever your forecasting model is).
Is there a difference between these rates for each carbon market? I’m working with the European carbon market, and I need to put these inputs to run the program to evaluate carbon sequestration, but I couldn’t find any place that showed me these indications of values that I could use as a reference.
Yes, all markets are different. This is likely a situation where you would have to find and download historical data from the European carbon market and conduct a prediction analysis yourself, unless you can find a study that has done so already. The paper linked above is a relatively complex model, depending on your use case you might be able to get away with something simpler.