Clean-Development Investments: An Incentive-Compatible CGE Modelling Framework

Christoph Böhringer, Thomas Rutherford () and Marco Springmann ()

Environmental & Resource Economics, 2015, vol. 60, issue 4, 633-651

Abstract: Emissions offset schemes, such as the Clean Development Mechanism established under the Kyoto Protocol and sectoral crediting schemes which are currently discussed as a new market-based mechanism within the United Nations Framework Convention on Climate Change, allow industrialized Annex I countries to offset part of their domestic emissions by investing in emissions-reduction measures in developing non-Annex I countries. Here we present a novel modelling framework for offset schemes which can be used in computable general equilibrium models to quantify the sector-specific and macroeconomic impacts of clean-development investments. Compared to conventional approaches that mimic offset schemes as sectoral emissions trading, our framework adopts a micro-consistent representation of an offset scheme’s incentive structure and its investment characteristics. In our empirical application, we show that incentive compatibility implies that the offset-generating sectors do not suffer, and that overall cost savings from the offset scheme tend to be lower than suggested by conventional modelling approaches. Copyright Springer Science+Business Media Dordrecht 2015

Keywords: Clean Development Mechanism; Clean-development investments; Climate finance; Computable general equilibrium modelling; C68; Q58 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

Downloads: (external link)
http://hdl.handle.net/10.1007/s10640-014-9762-3 (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Clean-Development Investments: An Incentive-Compatible CGE Modelling Framework (2013)
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:kap:enreec:v:60:y:2015:i:4:p:633-651

Ordering information: This journal article can be ordered from
http://www.springer. ... al/journal/10640/PS2

DOI: 10.1007/s10640-014-9762-3

Access Statistics for this article

Environmental & Resource Economics is currently edited by Ian J. Bateman

More articles in Environmental & Resource Economics from Springer, European Association of Environmental and Resource Economists Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().