Browsing by Subject "VER"

This thesis studies market demand and supply in the voluntary forest carbon markets. The first section focuses on demand and provides an overview about the market mechanisms, buyer’s reasons to buy credits, and current demand in the markets. Supply will be studied with supply-chain approach. Supply-chain is a system moving a product or service from supplier to customer. The supply-chain section is divided into three parts. The first part finds out whether or not forests have the ability to sequester carbon and what kind of forest projects there has been. It also introduces the processes in which forest carbon credits are issued. The second part focuses on certification and verification schemes. Third part presents market places and the actors involved in carbon credit trading. Carbon markets will be evaluated on foreign and domestic basis. The aim of this thesis is to find out how well the voluntary carbon markets meet the conditions of perfect competition. The theory is based on the theory of competitive market structure and the price mechanism, where demand equals supply at the equilibrium price and quantity. The equilibrium should be found automatically within a perfectly competitive market when buyers and sellers interact. The empirical part of the study examines carbon credit issuance, project processes, certification and markets. The research questions are: 1. Do markets have infinite buyers and sellers? 2. Are products homogenous? 3. Do consumers and producers have perfect knowledge of price, utility, quality and production methods? 4. Is it easy to enter or exit the markets? The thesis is based on literature. Standards, marketplaces, and projects that were selected to the study were chosen according to the popularity based on market volume or forest-related characters. The research approach is qualitative. The collected data was analysed using content analysis. Economics and market theory form the theoretical basis of the analysis. Classification of the data is based on the theoretical framework. According to the theories a loose framework was formed to allow data reduction. Framework divides demand and supply-chain into separate parts. Research question number one is examined using a demand section. Research questions numbers 2-4 are examined using supply-chain sections. The study resulted in a conclusion that voluntary forest markets do not meet the conditions of perfect competition. Voluntary forest carbon markets are not perfectly competitive. Instead markets are uncompetitive where commodities are heterogeneous. There is only limited amount of forest projects and forestry based credits. Unit price is set to match the cost, in which case it is not determined by the market. Price-setting is possible because it is possible to differentiate projects. Imperfect competition in the market remains for mobility obstacles between markets have been set. Credit certified under certain standard, are not generally acceptable to another standard. The study results support the findings of studies conducted in the past.