Local Actions, Global Impacts: International Cooperation and the CDM

Abstract

We examine the Clean Development Mechanism (CDM) market as form of cooperative involvement between developing-host and developed-investor countries, likely to evolve into a form of Foreign Direct Investment (FDI) with opportunities for further collaboration. We use three variables to measure the level of cooperation, namely number of joint CDM projects, volume of CO_2 abatement realized from the CDM projects, and volume of investment in the CDM projects. We rely on international economics and international relations literature to suggest that the levels of economic development and institutional development, energy structures of the economies, country vulnerability to various climate change effects, political constraints, trade, and historic relations between the host and investor countries are good predictors of the level of cooperation in CDM projects. The main policy relevant conclusions include the importance of simplifying the CDM project regulation/clearance cycle as an essential policy option for further growth of joint CDM projects; improving governance structures in the host and investor countries that would lead to higher political stability and trust between the countries for business, including CDM; and strengthening trade or other long-term economic activities that connect the countries for fostering CDM cooperation. © 2011 by the Massachusetts Institute of Technology.

Laissez faire and the Clean Development Mechanism: determinants of project implementation in Indian states, 2003–2011

“…The hypotheses relate climate mitigation potential and political uncertainty to the implementation of CDM projects. Since mitigation potential is commonly analyzed in the cross-national literature (Castro and Michaelowa, 2011;Dinar et al, 2011), it is natural to expect it to shape project implementation under India's liberal policy. Because political uncertainty has not been analyzed in past studies, our results can inform future studies of the politics of the CDM in other political contexts.…”

“…While the empirical literature on the CDM has analyzed cross-national variation in project implementation (Dechezleprêtre, Glachant, and Ménière, 2008;Castro and Michaelowa, 2011;Dinar et al, 2011), there are few studies that investigate sub-national variation (Bayer, Urpelainen, and Wallace, 2013). Most existing studies on differences in the national governance of the CDM across countries (Ganapati and Liu, 2008;Benecke, 2009;Schroeder, 2009) do not test hypotheses on how national institutions shape sub-national patterns of project implementation.…”

Small and beautiful? The Programme of Activities and the least developed countries

“…The attractiveness of a country or region as project host depends on its marginal abatement cost of emissions reductions, its institutional capacity, and business climate for investors (Castro and Michaelowa, 2011;Winkelman and Moore, 2011;Dinar et al, 2011;Castro, 2012;Jung, 2006;Oleschak and Springer, 2007). While developing countries often have more low-cost mitigation potential than industrialized countries due to inefficiencies in the energy sector, they are also more likely to have less regulatory certainty, more economic and political instability, and lower institutional capacity than industrialized countries (Oleschak and Springer, 2007).…”

“…Of the three, trade flows also capture relationships between sellers and buyers of CDM carbon credits (Wang and Firestone, 2010;Dinar et al, 2011).…”

Leveraging private capital for climate mitigation: Evidence from the Clean Development Mechanism

“…Although there is now a substantial literature on publicprivate partnerships and private governance (Gulbrandsen, 2004;Kaul, 2006;Bernhagen and Mitchell, 2010;Büthe and Mattli, 2011), earlier research has not developed explicit models to compare bilateral and unilateral modes of project implementation. In the literature on the Clean Development Mechanism (CDM), the difference between bilateral and unilateral implementation is recognized (Dinar et al, 2011;Winkelman and Moore, 2011;World Bank, 2011). For example, these studies note that the unilateral implementation of mitigation projects has become increasingly popular.…”