Estimating leakage rates for Ontario forest offset projects

Forest offset projects can contribute to climate change mitigation. The key question is whether mitigation benefits of forest offset projects are undermined by shifting emissions elsewhere—a problem known as leakage. In this study, we estimated leakage caused by market effects for forest offset projects in Ontario, Canada, using a well-known method developed by Murray et al. (2004). Leakage was calculated using price elasticities of supply and demand from a literature search of studies relevant to Ontario. The average leakage rate was 52.2%, with the 5–95 th percentile range from 24.7% to 76.2%. Leakage estimates were tested for sensitivity to policy scale and substitutability parameters.