Economics of Climate Change Responses and Mode of International Funding of Climate Projects

Abstract

Energy-intensive industrialization and various anthropogenic actions by humans over centuries have resulted in a huge build up of Greenhouse gases triggering consequential ‘Greenhouse effects’ and ‘Global warming’. This, in turn, has caused global climate change with adverse impact on ecology, environment, economy and human health. Among other things, the economic impact of global warming and climate change/aberration has been widely acknowledged to be phenomenal. In past few years, climate change economics has focused on diagnosing the economic underpinnings of climate change and offering positive and normative analyses of policies to confront the problem. While overlapping with other areas of environmental economics, climate change economics has a unique focus because of distinctive features of the climate problem, including the long time scale, the extent and nature of uncertainties, the international scope of the issue, and the uneven distribution of policy benefits and costs across space and time. The ‘Kyoto Protocol’ (1997), ‘Bali Action Plan’ (2007), and of late Copenhagen Accord (2009), have effectively provided, among other things, the institutional mechanisms and broad operational framework for funding such of those initiatives at local, regional and global levels that can limit and progressively reduce greenhouse gas emissions through carefully designed mitigation and adaptation actions. In this paper, an attempt has been made to discuss the various economic and financial implications in climate change impact assessment and thereby help formulation of appropriate strategies, including the mode of transfer of resources and technologies from the developed to the developing economy to respond to the various adverse impacts of climate change, primarily through mitigation and adaptation actions. The emerging business opportunities, borne out of economic responses to climate change management and Emissions trading in the post-Copenhagen scenario, is also briefly discussed.

Climate cooperation from Kyoto to Paris: What can be learnt from the CDM experience?

“…Annex-I and non-Annex-I countries, roughly corresponding to developed countries and developing countries, respectively) and the establishment of Flexible Mechanisms. 1 One of these mechanisms, the CDM, allows developed countries to realise mitigation projects in developing countries to reduce emissions, according to preliminary approved methodologies, and to contribute to sustainable development. CDM projects are asked to respect the "additionality criteria", according to which emission reductions can be certified only if they are additional to any that would occur in the absence of the certified project activity (Art.…”

“…The main concerns regard the concentration of projects in a few host countries (mainly China), excluding fragile countries [5] and the actual contribution to sustainable development [6]. 1 For a comprehensive description of the Kyoto Flexible Mechanisms, please refer to [55].…”

“…Accordingly, the dependent variable investigated is the cost ratio (ri) related to the installation of renewable energy plants: 𝑟 𝑖 = 𝐼𝑁𝑉 𝑖 𝑀𝑊 𝑖 (1) where INVi is the amount of the investment related to each project i (million USD) and MWi is the resulting capacity of the installed renewable energy plant expressed in megawatts (MWs). We consider that, ceteris paribus, a higher ratio implies a lower cost-effectiveness.…”

“…The issue of climate change, uneven distribution of policy benefits and costs across space and time [1] caused the international community to "think globally" in approaching environmental issues. From the 1992 Rio Earth Summit and the United Nations Framework Convention on Climate Change (UNFCCC)…”