Reforestation versus Abatement. Suppose your firm commits to reducing greenhouse gases by 11 tons per year. You can pay for a reforestation project that offsets your emissions at a cost of $7 per ton...

Reforestation versus Abatement. Suppose your firm commits to reducing greenhouse gases by 11 tons per year. You can pay for a reforestation project that offsets your emissions at a cost of $7 per ton of carbon offset. Or you can modify your production cost to abate pollution. Your marginal cost of abating the first ton is $3; the marginal cost increases by $1 for each additional ton, to $4 for the second ton, $5 for the third ton, and so on.

a. What’s the best combination of reforestation offsets and abatement?

b. How much money does your firm save by using the offsets?