This paper examines the cost of producing emission reduction credits under the Clean Development Mechanism. Using project-specific data, cost functions are estimated using alternative functional forms. ... See More + The results show that, in general, the distribution of projects in the pipeline does not correspond exclusively to the cost of generating anticipated credits. Rather, investment choices appear to be influenced by location and project type considerations in a way that is consistent with variable transaction costs and investor preferences among hosts and classes of projects. This implies that comparative advantage based on the marginal cost of abatement is only one of several factors driving Clean Development Mechanism investments. This is significant since much of the conceptual and applied numerical literature concerning greenhouse gas mitigation policies relies on presumptions about relative abatement costs. The authors also find that Clean Development Mechanism projects generally exhibit constant or increasing returns to scale. In contrast, they find variations among classes of projects concerning economies of time. See Less -
Policy Research Working Paper WPS6262 NOV 01, 2012
Rahman, Shaikh M.; Dinar, Ariel; Larson, Donald F.
The scale of investment needed to slow greenhouse gas emissions is larger than governments can manage through transfers. Therefore, climate change policies rely heavily on markets and private capital. ... See More + This is especially true in the case of the Kyoto Protocol with its provisions for trade and investment in joint projects. This paper describes institutions and policies important for new carbon markets and explains their origins. Research efforts that explore conceptual aspects of current policy are surveyed along with empirical studies that make predictions about how carbon markets will work and perform. The authors summarize early investment and price outcomes from newly formed markets and point out areas where markets have preformed as predicted and areas where markets remain incomplete. Overall the scale of carbon-market investment planned exceeds earlier expectations, but the geographic dispersion of investment is uneven and important opportunities for abatement remain untapped in some sectors, indicating a need for additional research on how investment markets work. How best to promote the development and deployment of new technologies is another promising area for study identified in the paper. See Less -
Policy Research Working Paper WPS4761 OCT 01, 2008
Dinar, Ariel; Rahman, Shaikh Mahfuzur; Entler, Rebecca; Ambrosi, Philippe; Larson, Donald F.
|Title||Document Date||Report No.||Document Type||Also available in|
|The cost structure of the clean development mechanism (English) See More +||NOV 01, 2012||WPS6262||Policy Research Working Paper|
|Carbon markets, institutions, policies, and research (English) See More +||OCT 01, 2008||WPS4761||Policy Research Working Paper|