@techreport{Kuosmanen2004Proposal,
abstract = {Economic models suggest that in many cases, market leakage rates of greenhouse gas
abatement reach the two-digit percentage range. Consequently, the Marrakesh Accords
require Clean Development Mechanism (CDM) projects to account for leakage. Despite
this, most project proponents neglect market leakage for their project, because the influence
of an individual project on market prices seems to be negligible. Insufficient leakage
accounting is facilitated by a lack of theories and applicable proposals regarding the
quantification and attribution of leakage effects. The aim of this paper is to develop a
proposal for the attribution of market leakage effects to CDM projects. To this purpose,
we identify the transmission mechanisms for CDM project leakage, investigate the current
practice of leakage accounting, and analyse alternative attribution methods for
leakage effects that are transmitted through price changes. We find that project-specific
approaches must fail to take account of such leakage effects. Consequently, we propose
to estimate aggregate market leakage effects and attribute them proportionally to individual
projects. Our proposal is based on commodity-specific leakage factors which can
be applied by project developers to any emission reductions that are associated with a
project?s leakage-relevant demand or supply changes. The proposal is conservative, equitable,
incentive compatible and applicable at manageable costs.},
author = {Timo Kuosmanen and Frank V\"{o}hringer and Rob B. Dellink},
copyright = {http://www.econstor.eu/dspace/Nutzungsbedingungen},
keywords = {D62; F18; Q41; Q25; 330; Climate policy; Clean Development Mechanism; market leakage; leakage accounting; sharing rules; Kohlendioxid; Luftverunreinigung; Clean Development Mechanism; Umwelt\"{o}konomik; Theorie; Welt},
language = {eng},
number = {262},
title = {A Proposal for the Attribution of Market Leakage to CDM Projects},
type = {HWWA Discussion Paper},
url = {http://hdl.handle.net/10419/19234},
year = {2004}
}
