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Do Clean Development Mechanism projects generate local employment? Testing for sectoral effects across Brazilian municipalities

Yadira Mori Clement () and Birgit Bednar-Friedl ()
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Yadira Mori Clement: University of Graz
Birgit Bednar-Friedl: University of Innsbruck

No 2017-05, Graz Economics Papers from University of Graz, Department of Economics

Abstract: Clean Development Mechanism (CDM) investments have the two-fold objective of mitigating greenhouse gas emissions and contributing to sustainable development. But while the contribution to mitigation has been analysed extensively in the literature, the impact on development has barely been quantified empirically. This paper intends to address this latter gap by investigating the impact of different types of CDM investments on local employment generation. A dynamic panel regression model for the period 2004-2014 across Brazilian municipalities supports that some CDM projects have not only stimulated job creation beyond the renewable energy sector, but also had a contractive effect in some economic sectors. We find moreover a clear difference by project type: For waste handling and methane avoidance projects, overall employment increases while no such effect emerges for hydro projects. However, these job effects are mainly transitory, i.e. in the first or second year after the project's registration; the expansion effect can be explained as a result of local employment demands generated during the project's construction and operation phases. The lack of durability or the temporary effects in employment of these projects might question the contribution of their benefits to local sustainable development.

Keywords: Employment generation; Clean development mechanism; Industry; Regional development; Municipality level; Brazil; Dynamic panel model (search for similar items in EconPapers)
JEL-codes: P48 Q52 Q56 R23 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cta, nep-ene, nep-env and nep-ppm
Date: 2017-05
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