How to Improve the Likelihood of CDM Approval? Institutional shortcomings and the Case of West Africa

Urs Steiner Brandt,Gert Tinggaard Svendsen

doi:10.5296/emsd.v3i1.4492

Abstract

How can the likelihood of Clean Development Mechanism (CDM) approval be improved in the face of institutional shortcomings? To answer this question, we focus on the three institutional shortcomings of income sharing, risk sharing and corruption prevention concerning afforestation/reforestation (A/R). Furthermore, three main stakeholders are identified, namely investors, governments and agents in a principal-agent model regarding monitoring and enforcement capacity. Developing countries such as West Africa have, despite huge potentials, not been integrated in A/R CDM projects yet. Remote sensing, however, appears to be an effective tool to overcome the three institutional shortcomings. Thus, a pilot project should be considered in near future to develop a best practice system.

Highlights

How can the likelihood of Clean Development Mechanism (CDM) approval be improved in the face of institutional shortcomings? To answer this question, we focus on the three institutional shortcomings of income sharing, risk sharing and corruption prevention concerning afforestation/reforestation (A/R)
REDD+ aims to slow down CO2 release, and CDM addresses afforestation and reforestation (A/R) projects to increase the storage of carbon by increasing forest biomass, see e.g., Palmer (2011) and Lederer (2011) for an overview of REDD+ and CDM
The main question was how to increase the likelihood of CDM approval in the face of institutional shortcomings? This question has largely been neglected by the literature so far

Summary

Introduction

REDD+ aims to slow down CO2 release, and CDM addresses afforestation and reforestation (A/R) projects to increase the storage (sequestration) of carbon by increasing forest biomass, see e.g., Palmer (2011) and Lederer (2011) for an overview of REDD+ and CDM. Both are part of the broader idea of LULUCF: land use, land use change and forestry.

Potential Economic Gains from the CDM under Full Information

The Principal-agent Problem

Observable Growth in Biomass via Remote Sensing

A Pilot Project in West Africa?

Findings

Conclusion