Abstract
Abstract The goal of the Clean Development Mechanism (CDM) is both emission reduction and sustainable development, but while emission reductions generate revenues for the project developer, no such benefit results from the achievement of sustainable development. The objective of this research is therefore to analyze to which extent CDM investments have led to sustainable development benefits, and whether there is a difference in these effects between renewable energy and waste handling and disposal projects. Complementary to existing studies, which are based on potential effects reported ex-ante by project developers, this paper aims at quantifying impacts of CDM projects on sustainable development based on empirical data. Using data for years 2000 (pre-CDM) and 2010 (post-CDM) for Brazilian municipalities, this paper combines difference-in-differences assessment with matching techniques to identify the effect of CDM investments on development and poverty indicators by distinguishing for four project’s types: hydro, biomass energy, landfill gas and methane avoidance. Results show that CDM project types have stimulated local income and labor opportunities but only hydro projects have contributed to reduce poverty at the municipal level for the period analyzed.
Highlights
According to the twofold objective of the CDM instrument, this mechanism was designed ‘‘to help developed countries fulfill their commitments to reduce emissions”, and ‘‘to assist developing countries in achieving sustainable development”
Since the CO2 emission reductions is the only objective that is rewarded by the market through the generation of Certified Emission Reduction (CER) credits, the CDM instrument does not create by itself adequate incentives to fulfill the sustainable development objective (Ellis, Winkler, Corfee-Morlot, & Gagnon-Lebrun, 2007; Paulsson, 2009)
The objective of this research is to determine to what extent CDM investments have provided Brazilian municipalities with sustainable development benefits by measuring the impact on development and poverty indicators
Summary
According to the twofold objective of the CDM instrument, this mechanism was designed ‘‘to help developed countries fulfill their commitments to reduce emissions”, and ‘‘to assist developing countries in achieving sustainable development”. What sustainable development means or how this concept is or should be understood under this framework is (still) arguable or not clear (Banuri and Gupta, 2000; Schneider, 2007). Under the Marrakesh Accords (2001), each host country must decide what aspects of sustainable development should be accomplished when implementing CDM projects in its territory. Concerns regarding the effective achievement of this objective have emerged and been discussed even before the official launch and implementation of the CDM instrument in host countries (See: Banuri and Gupta, 2000; Kolshus, Vevatne, Torvanger, & Aunan, 2001). Since the CO2 emission reductions is the only objective that is rewarded by the market through the generation of Certified Emission Reduction (CER) credits, the CDM instrument does not create by itself adequate incentives to fulfill the sustainable development objective (Ellis, Winkler, Corfee-Morlot, & Gagnon-Lebrun, 2007; Paulsson, 2009)
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