Risk Management in the Clean Development Mechanism (CDM) – The Potential of Sustainability Labels

Adrian Muller ()

No 228, Working Papers in Economics from University of Gothenburg, Department of Economics

Abstract: There is a danger that the CDM will fail to live up to its goals, namely reduction of greenhouse gas emissions and enhanced sustainable development. Sustainability labeling is a promising strategy to hedge against such failures. Labels could also serve as a business risk-hedging tool. The existing labels for the CDM are not comprehensive enough, however. A two-tiered stakeholder participatory approach with national flexibility under an international umbrella could be a promising option. Due to the necessary bureaucracy this might not be feasible. Labels in the spirit of the existing approaches – addressing only restricted aspects of sustainability or not applicable to all sectors may be a second best option. Other instruments for the further regulation of the CDM, such as a profit tax, should therefore be discussed as well.

Keywords: CDM; labels; sustainability indicators; risk; equity (search for similar items in EconPapers)
JEL-codes: L15 M14 O13 Q01 Q54 (search for similar items in EconPapers)
Pages: 16 pages
Date: 2006-09-20
New Economics Papers: this item is included in nep-ene and nep-env
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Citations: View citations in EconPapers (3)

Forthcoming in Climate change, Sustainable Development and Risk - an Economic and Business View, Antes, R., Hansjürgens, B., Zabel, H.-U. (eds.), 2007, Springer.

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