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

Christoph Böhringer, Thomas F. Rutherford () and Marco Springmann ()
Additional contact information
Thomas F. Rutherford: University of Wisconisn-Madison
Marco Springmann: University of Oldenburg, Department of Economics

No V-354-13, Working Papers from University of Oldenburg, Department of Economics

Abstract: The Clean Development Mechanism (CDM) established under the Kyoto Protocol allows industrialized Annex I countries to offset part of their domestic emissions by investing in emissionsreduction projects in developing non-Annex I countries. We present a novel CDM modelling framework which can be used in computable general equilibrium (CGE) models to quantify the sector-specific and macroeconomic impacts of CDM investments. Compared to conventional approaches that mimic the CDM as sectoral emissions trading, our framework adopts a microeconomically consistent representation of the CDM incentive structure and its investment characteristics. In our empirical application we show that incentive compatibility implies that the sectors implementing CDM projects do not suffer, and that overall cost savings from the CDM tend to be lower than suggested by conventional modelling approaches.

Keywords: Clean Development Mechanism; Computable General Equilibrium Modeling (search for similar items in EconPapers)
JEL-codes: C68 Q58 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2013-03, Revised 2013-03
New Economics Papers: this item is included in nep-cmp, nep-ene, nep-env and nep-ppm
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Citations: View citations in EconPapers (2)

Published in Oldenburg Working Papers V-354-13

Downloads: (external link)
http://www.vwl.uni-oldenburg.de/download/V-354-13.pdf First version, 2013 (application/pdf)

Related works:
Journal Article: Clean-Development Investments: An Incentive-Compatible CGE Modelling Framework (2015)
Working Paper: Clean-development investments: an incentive-compatible CGE modeling framework (2013)
Working Paper: Clean-Development Investments: An Incentive-Compatible CGE Modelling Framework (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:old:dpaper:354

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