Convergence Criteria for Participation in the Flexible Mechanisms of the Kyoto Protocol

We suggest a multi-layered system of three convergence criteria – similar to those used in the run-up to the European monetary union – that define the notion of "demonstrable progress" towards reaching the emission commitments under the Kyoto Protocol. These are the existence of an independently evaluated national emissions inventory, the level of domestic policies and measures, and the quantitative convergence of emissions towards the Kyoto target. While the first of these criteria constitutes a necessary condition for use of the Kyoto Mechanisms, the other two should determine the degree of participation allowed for any given Annex I country.     

Equity and cost-effectiveness of multilateral adaptation finance: are they friends or foes?

This paper analyzes potential criteria to allocate international funding for adaptation to climate change, as a response to one of the main governance challenges of international adaptation funding—the prioritization of project proposals given scarce funding. Based on the review of the equity and cost-effectiveness literature and relevant policy documents, we identify three potential indicators for equity (vulnerability level, poverty, equal funding per capita), and three indicators for cost-effectiveness (economic savings in absolute and relative terms, human lives saved). Applying these simple indicators to information provided in all 39 project documents considered by the Adaptation Fund Board (AFB) in 2011, we find that projects approved or endorsed by the AFB rank high according to one cost-effectiveness indicator (absolute economic savings), while they rather rank low according to all equity and further cost-effectiveness indicators. Furthermore, we analyze whether equity and cost-effectiveness are two contradicting goals, or whether ways can be found to reconcile both goals in multilateral adaptation finance. We conclude from both the theory and the 39 analyzed project documents that a pure economic definition of cost-effectiveness tends to be in contradiction with equity but that trade-offs between equity and cost-effectiveness can be limited if relative economic savings or human live savings are used as indicator for cost-effectiveness.     

Unilateral CDM—can developing countries finance generation of greenhouse gas emission credits on their own?

The Clean Development Mechanism (CDM) was originally seen as an instrument with a bi- or multilateral character where an entity or fund from an industrialised country invests in a project in a developing country. The sluggish implementation of incentives for industrialised country companies to embark on CDM projects and low carbon prices led to a preference for just buying Certified Emission Reductions (CERs) instead of investing in projects. Thus a third option has gained prominence—the unilateral option where the project development is planned and financed within the developing country. We propose that a project should be called “pure unilateral” if it involves no foreign direct investment (FDI), only has the approval of the Designated National Authority (DNA) of the host country and sells its CERs after certification directly to an industrialised country. Unilateral projects can become attractive if the host country risk premium for foreign investors is high despite a high human, institutional and infrastructural capacity and domestic capital availability. Moreover, transaction costs can be reduced compared to foreign investments that have to overcome bureaucratic hurdles. On the other hand, technology transfer is likely to be lower, capacity building has to be undertaken by the host country and all risks have to be carried by host country entities. The potential to carry out unilateral CDM projects strongly varies among host countries. Whereas several countries from Asia and Latin America can design and implement projects autonomously, most of the Sub-Saharan countries rely on foreign support. International donors of capacity building grants should increasingly address those countries that are not presently focused on by foreign investors and support them in the design of local projects.

Implications of EU Enlargement on the EU Greenhouse Gas 'Bubble' and Internal Burden Sharing

Currently, the EU-15 forms the only 'bubble' under the Kyoto Protocol and has negotiated an internal burden sharing. A strategic EU climate policy should include accession countries. Thus, even in the case of early ratification of the Kyoto Protocol by 2002, it would be sensible to form a bubble with all countries that are certain to be EU members during the commitment period 2008–2012. Of course due to Art. 4.4 of the Protocol the EU-15 has to stick to its own bubble. However, nothing prevents it from forming an implicit bubble including all first wave countries by inducing them to form a bubble on their own and transfer the surplus to the EU-15. Similarly, second wave countries should form a bubble of their own to co-ordinate JI and permit transfers to the EU. This would reduce the gap between business-as-usual and the target by about 50%. If ratification is delayed to a point where it is clear which second wave countries will be members by 2008, the bubble should be extended by those countries. When in 2005 target negotiations start for the second commitment period, the EU should negotiate a bubble consisting of all states being certain to be members by 2013.     

Can process conditionality enhance aid effectiveness?

Can process conditionality enhance poverty reduction in developing countries? We address this question in a political-economic framework with political distortions on the recipient and the donor side. Process conditionality is a useful tool only if the international financial institutions hold all necessary information to assess the political situation in recipient countries and to select the true representatives of the poor into a participatory process. If they do not hold this information or if bureaucratic interests reduce their incentive to acquire this information, process conditionality loses its effectiveness.     

The Political Economy of the Enhanced HIPC-Initiative

Only three years after its endorsement bythe World Bank and the IMF, the HeavilyIndebted Poor Country (HIPC) – Initiativewas considerably altered and enhanced. Thispolicy shift can be explained as a resultof utility maximization behavior bynational and international politicians,international bureaucrats and NGO. Apolitico-economic model suggests that theoverall rise of HIPC default risk and thesymbolic value of the year 2000 have beenthe two major determinants of changes involume, eligibility, and conditionalityrequirements.     

Governing complexity: How can the interplay of multilateral environmental agreements be harnessed for effective international market-based climate policy instruments?

International Environmental Agreements: Politics, Law and Economics - Major new multilateral environmental agreements (MEAs) have entered into force in 2016, including the Paris Agreement (PA)...     

Outlook for the International Climate Policy Regime– Revolution or Reform?

International Environmental Agreements: Politics, Law and Economics -