The monetary compensation mechanism: An alternative to the clean development mechanism

Xuemei Liu

Ecological Economics, 2008, vol. 66, issue 2-3, 289-297

Abstract: One of the key challenges in resolving global warming problem is how to induce developing countries to reduce emissions. The CDM was proposed in the Kyoto Protocol as a means of obtaining the cooperation of developing countries in controlling greenhouse gases, but it has some intrinsic problems and has generated considerable controversy. This paper presents an alternative mechanism -- the Monetary Compensation Mechanism (MCM). I study the characteristics of this mechanism with a dynamic principal-agent model. By solving the model numerically, I obtain the optimal solution for a scenario based on 1990 data. The monetary compensation rate under the MCM is comparable to the price of CERs in the CDM, but the MCM has several advantages over the CDM.

Date: 2008
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0921-8009(07)00478-8
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolec:v:66:y:2008:i:2-3:p:289-297

Access Statistics for this article

Ecological Economics is currently edited by C. J. Cleveland

More articles in Ecological Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().