Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/248913 
Year of Publication: 
2021
Series/Report no.: 
CESifo Working Paper No. 9368
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
We develop and implement a new method for identifying wasted subsidies, and use it to provide systematic evidence on the misallocation of carbon offsets in the Clean Development Mechanism—the world’s largest carbon offset program. Using newly constructed data on the locations and characteristics of 1,350 wind farms in India—a context where it was believed, ex ante, that the Clean Development Mechanism could significantly increase development above baseline projections—we estimate that at least 52% of approved carbon offsets were allocated to projects that would very likely have been built anyway. In addition to wasting scarce resources, we estimate that the sale of these offsets to regulated polluters has substantially increased global carbon dioxide emissions.
Subjects: 
carbon offsets
infra-marginal support
subsidies
investment
wind power
misallocation
JEL: 
H23
H43
L94
Q42
Q54
Document Type: 
Working Paper
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