The Political Economy of Development and Climate Policy - Prospects and Challenges for an Emission Trading Scheme as Development and Climate Policy Tool

Andreas Freytag (), Matthias Menter (), Jan Hauke Montag () and Sebastian Schuhmann ()
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Matthias Menter: Friedrich Schiller University Jena
Jan Hauke Montag: Friedrich Schiller University Jena
Sebastian Schuhmann: Friedrich Schiller University Jena

No 2023-019, Jena Economics Research Papers from Friedrich-Schiller-University Jena

Abstract: Economic development and climate change constitute two of today’s major international policy challenges. While development cooperation has long been on the political agenda, addressing global climate change has gained policymakers’ attention more recently. Transfers for financing single projects have been a common practice in the development field. Empirical evidence suggests that the effectiveness has remained disappointing. Consequently, many developing countries face governance problems affecting their ability to master challenges associated with climate change. Current trends in international climate cooperation follow a similar approach. Political efforts may prove insufficient to meet climate objectives if similar deficiencies occur in climate cooperation. Applying a political economy approach, this paper provides a critical assessment of current practices in international development and climate policies highlighting the observed deficiencies in development and potential implications for climate cooperation. Acknowledging the interlinkages and linking development and climate change policies, could increase the effectiveness and efficiency of political efforts. The paper, furthermore, discusses market-based instruments, especially Emission Trading Schemes as policy alternatives as well as the potential merits for circumventing and solving institutional problems experienced in climate cooperation. We discuss the political economic challenges affecting the implementation and operation of (a global) scheme.

Keywords: development; climate change; policy coordination; emission trading scheme; issue linkage (search for similar items in EconPapers)
JEL-codes: O13 O44 P41 P48 (search for similar items in EconPapers)
Date: 2023-11-21
New Economics Papers: this item is included in nep-ene and nep-env
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