Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/24586 
Year of Publication: 
2007
Series/Report no.: 
ZEW Discussion Papers No. 07-026
Publisher: 
Zentrum für Europäische Wirtschaftsforschung (ZEW), Mannheim
Abstract: 
This paper quantifies the macroeconomic impacts of the Clean Development Mechanism (CDM) under the Kyoto Protocol based on a computable general equilibrium (CGE) model of international trade and energy use. Employing project-based CDM supply data we assess the relative importance of transaction costs and investment risks as well as CDM regulations through supplementarity and additionality criteria. Our numerical results show that the macroeconomic impacts of transaction costs and investment risks are negligible: Given the large supply of cheap project-based emissions credits in developing countries, compliance to the Kyoto Protocol can be achieved at a very low cost. However, regulatory restrictions such as a supplementarity criterion can substantially curtail the potential efficiency gains from where-flexibility in climate policy.
Subjects: 
Kyoto Protocol
Emissions Trading
Clean Development Mechanism
Computable General Equilibrium
JEL: 
C68
Q58
Q56
D61
Document Type: 
Working Paper

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