Abstract
Carbon leakage is an important concern because it can reduce the environmental effectiveness of the Kyoto Protocol. The Clean Development Mechanism (CDM), one of the flexibility mechanisms allowed under the protocol, has the potential to reduce carbon leakage significantly because it reduces the relative competitive disadvantage to Annex-B countries of restricting greenhouse gas emissions. The economic rationale behind this mechanism is explored in a theoretical analysis. It is then analysed numerically using a computable general equilibrium (CGE) model. The results indicate that, assuming appropriate accounting for leakage and under realistic assumptions on CDM activity, the CDM has the potential to reduce the magnitude of carbon leakage by more than one-half.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.