Paper Number

1936

Paper Type

CRP

Abstract

Companies increasingly commit to achieving ‘net zero’. While sellers of carbon credits are facing increasing demand in Voluntary Carbon Markets (VCMs), buyers can still not reliably determine the quality of these credits. Such information asymmetries can lead to a ‘market for lemons,’ where buyers’ willingness to pay remains under the expected price of high-quality credit sellers. Thus, these credits are driven out of the market. Information asymmetries in VCMs can be traced back to the underlying Monitoring, Reporting, and Verification (MRV). While digital technologies can reduce information asymmetries, only few start-ups focus on digital MRV. To refine existing and design new digital MRV processes, we apply Design Science Research (DSR) to propose a method for systematically selecting digital technologies. We evaluate our method via a case study on soil carbon credits and illustrate that our method may foster a tailored digital transformation of MRV to alleviate the lemons problem.

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Jun 14th, 12:00 AM

When Voluntary Carbon Markets Give You Lemons, Make Lemonade: A Method for Selecting Digital Technologies in MRV Processes

Companies increasingly commit to achieving ‘net zero’. While sellers of carbon credits are facing increasing demand in Voluntary Carbon Markets (VCMs), buyers can still not reliably determine the quality of these credits. Such information asymmetries can lead to a ‘market for lemons,’ where buyers’ willingness to pay remains under the expected price of high-quality credit sellers. Thus, these credits are driven out of the market. Information asymmetries in VCMs can be traced back to the underlying Monitoring, Reporting, and Verification (MRV). While digital technologies can reduce information asymmetries, only few start-ups focus on digital MRV. To refine existing and design new digital MRV processes, we apply Design Science Research (DSR) to propose a method for systematically selecting digital technologies. We evaluate our method via a case study on soil carbon credits and illustrate that our method may foster a tailored digital transformation of MRV to alleviate the lemons problem.

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