Clean-development investments: an incentive-compatible CGE modeling framework

Marco Springmann, Christoph Böhringer and Thomas F. Rutherford

VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order from Verein für Socialpolitik / German Economic Association

Abstract: The Clean Development Mechanism (CDM) established under the Kyoto Protocol allows industrialized Annex I countries to offset part of their domestic emissions by investing in emissions-reduction projects in developing non-Annex I countries. We present a novel CDM modeling framework which can be used in computable-general-equilibrium (CGE) models to quantify the sector-specific and macroeconomic impacts of CDM investments. Compared to conventional approaches that mimic CDM as sectoral emission trading, our framework adopts a micro consistent representation of the CDM incentive structure and its investment characteristics. In our empirical application based on GTAP data we show that incentive compatibility implies that CDM-implementing sectors do not suffer and overall welfare gains tend to be lower than suggested by conventional modeling approaches.

JEL-codes: C68 D58 Q56 (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-cmp, nep-ene, nep-env and nep-ppm
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https://www.econstor.eu/bitstream/10419/79939/1/VfS_2013_pid_697.pdf (application/pdf)

Related works:
Journal Article: Clean-Development Investments: An Incentive-Compatible CGE Modelling Framework (2015)
Working Paper: Clean-Development Investments: An Incentive-Compatible CGE Modelling Framework (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc13:79939

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