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Do Clean Development Mechanism projects generate local employment? Testing for sectoral effects across Brazilian municipalities

Author

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  • Yadira Mori Clement

    (University of Graz)

  • Birgit Bednar-Friedl

    (University of Innsbruck)

Abstract

Clean Development Mechanism (CDM) investments have the two-fold objective of mitigating greenhouse gas emissions and contributing to sustainable development. But while the contribution to mitigation has been analysed extensively in the literature, the impact on development has barely been quantified empirically. This paper intends to address this latter gap by investigating the impact of different types of CDM investments on local employment generation. A dynamic panel regression model for the period 2004-2014 across Brazilian municipalities supports that some CDM projects have not only stimulated job creation beyond the renewable energy sector, but also had a contractive effect in some economic sectors. We find moreover a clear difference by project type: For waste handling and methane avoidance projects, overall employment increases while no such effect emerges for hydro projects. However, these job effects are mainly transitory, i.e. in the first or second year after the project's registration; the expansion effect can be explained as a result of local employment demands generated during the project's construction and operation phases. The lack of durability or the temporary effects in employment of these projects might question the contribution of their benefits to local sustainable development.

Suggested Citation

  • Yadira Mori Clement & Birgit Bednar-Friedl, 2017. "Do Clean Development Mechanism projects generate local employment? Testing for sectoral effects across Brazilian municipalities," Graz Economics Papers 2017-05, University of Graz, Department of Economics.
    • Handle: RePEc:grz:wpaper:2017-05
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    More about this item

    Keywords

    Employment generation; Clean development mechanism; Industry; Regional development; Municipality level; Brazil; Dynamic panel model;
    All these keywords.

    JEL classification:

    • P48 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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