Clean-development investments: an incentive-compatible CGE modeling framework
AbstractThe Clean Development Mechanism (CDM) established under the Kyoto Protocol allows industrialized Annex I countries to offset part of their domestic emissions by investing in emissions-reduction projects in developing non-Annex I countries. We present a novel CDM modeling framework which can be used in computable-general-equilibrium (CGE) models to quantify the sector-specific and macroeconomic impacts of CDM investments. Compared to conventional approaches that mimic CDM as sectoral emission trading, our framework adopts a micro consistent representation of the CDM incentive structure and its investment characteristics. In our empirical application based on GTAP data we show that incentive compatibility implies that CDM-implementing sectors do not suffer and overall welfare gains tend to be lower than suggested by conventional modeling approaches. --
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Bibliographic InfoPaper provided by Verein für Socialpolitik / German Economic Association in its series Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order with number 79939.
Date of creation: 2013
Date of revision:
Find related papers by JEL classification:
- C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
- D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
- 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
This paper has been announced in the following NEP Reports:
- NEP-ALL-2014-02-02 (All new papers)
- NEP-CMP-2014-02-02 (Computational Economics)
- NEP-ENE-2014-02-02 (Energy Economics)
- NEP-ENV-2014-02-02 (Environmental Economics)
- NEP-PPM-2014-02-02 (Project, Program & Portfolio Management)
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