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Future of the Clean Development Mechanism in tackling climate change

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  • Geethanjali Selvaretnam
  • Kannika Thampanishvong

Abstract

Using a theoretical framework, we explain the impact of the Clean Development Mechanism (CDM) on emissions in Annex I and non-Annex I countries. We show that on one hand, emissions in the non-Annex I country decline because of abatement sponsored by the Annex I country under the CDM; on the other hand, emissions may increase because (i) the Annex I country increases emissions in its own country, and (ii) the non-Annex I country crowds out the bene?ts from the CDM projects by increasing its domestic emissions. For the CDM to be e¤ective in reducing global emissions, we show that partial Certi?ed Emissions Reduction credits should be given to the Annex I country that sponsors CDM projects in the non-Annex I country. We also suggest that the CDM Executive Board should not allow the CDM projects to be hosted by non-Annex I countries that are too conscious about their emission levels.

Suggested Citation

  • Geethanjali Selvaretnam & Kannika Thampanishvong, 2008. "Future of the Clean Development Mechanism in tackling climate change," Discussion Paper Series, Department of Economics 200808, Department of Economics, University of St. Andrews.
  • Handle: RePEc:san:wpecon:0808
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    References listed on IDEAS

    as
    1. Cathrine Hagem & Bjart Holtsmark, 2009. "Does the Clean Development Mechanism have a viable future?," Discussion Papers 577, Statistics Norway, Research Department.
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    More about this item

    Keywords

    Clean Development Mechanism (CDM); Kyoto Protocol; emission; abatement.;

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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