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Risk Management in the Clean Development Mechanism (CDM) – The Potential of Sustainability Labels

Author

Listed:
  • Muller, Adrian

    () (Department of Economics, School of Business, Economics and Law, Göteborg University)

Abstract

There is a danger that the CDM will fail to live up to its goals, namely reduction of greenhouse gas emissions and enhanced sustainable development. Sustainability labeling is a promising strategy to hedge against such failures. Labels could also serve as a business risk-hedging tool. The existing labels for the CDM are not comprehensive enough, however. A two-tiered stakeholder participatory approach with national flexibility under an international umbrella could be a promising option. Due to the necessary bureaucracy this might not be feasible. Labels in the spirit of the existing approaches – addressing only restricted aspects of sustainability or not applicable to all sectors may be a second best option. Other instruments for the further regulation of the CDM, such as a profit tax, should therefore be discussed as well.

Suggested Citation

  • Muller, Adrian, 2006. "Risk Management in the Clean Development Mechanism (CDM) – The Potential of Sustainability Labels," Working Papers in Economics 228, University of Gothenburg, Department of Economics.
  • Handle: RePEc:hhs:gunwpe:0228
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    File URL: http://hdl.handle.net/2077/2689
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    Cited by:

    1. Drupp, Moritz A., 2011. "Does the Gold Standard label hold its promise in delivering higher Sustainable Development benefits? A multi-criteria comparison of CDM projects," Energy Policy, Elsevier, vol. 39(3), pages 1213-1227, March.
    2. Nussbaumer, Patrick, 2009. "On the contribution of labelled Certified Emission Reductions to sustainable development: A multi-criteria evaluation of CDM projects," Energy Policy, Elsevier, vol. 37(1), pages 91-101, January.
    3. Parnphumeesup, Piya & Kerr, Sandy A., 2011. "Classifying carbon credit buyers according to their attitudes towards and involvement in CDM sustainability labels," Energy Policy, Elsevier, vol. 39(10), pages 6271-6279, October.

    More about this item

    Keywords

    CDM; labels; sustainability indicators; risk; equity;

    JEL classification:

    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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