Assessing preferences for forest carbon credit and co-benefits: A choice experiment case study in Japan

Abstract

This study investigated corporate preferences for forest carbon credit offsets. The preferences were elicited through a choice experiment by administering a questionnaire to determine the price of credit, location of forest sequestration project offset, social development on local employment, preservation of ecosystem services, and unit of sustainable development goals (SDGs). We also examined stated preferences for credit offset and the willingness to pay. The analysis employed multinomial logit and random parameter logit (RPL) models to account for heterogeneity in preferences. The results showed that small and medium-sized enterprises (SMEs) held a neutral stance regarding offsetting their emissions and were categorized as being in the early stages of engagement with carbon offsetting. As SMEs can decide whether to purchase credit, we assessed their preferences for the type of credit-based forest carbon sequestration. SMEs had a significant preference for the location of the project, SDGs, and credit price when deciding to purchase credit based on the RPL model estimates. They were willing to pay JPY 6,191 (approximately USD 41) for the location of a project to be local rather than overseas, JPY 933 for a higher number of unit SDGs, and JPY 131 for an increase in the number of jobs. These results suggest that SMEs prefer purchasing local credit generated within their prefecture as a carbon offset alternative.