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Options for International Financing of Climate Change Mitigation in Developing Countries

Author(s): Mark Hayden (European Commission), Paul J.J. Veenendaal (CPB Netherlands), Žiga Žarnić (European Commission)

Options for International Financing of Climate Change Mitigation in Developing Countriespdf(478 kB) Choose translations of the previous link 

Summary for non-specialistspdf(106 kB) Choose translations of the previous link 


This paper provides a model-based analysis of the potential macro-economic impacts of different options for international financing of climate change mitigation in developing countries. The model used is the multi-region and multi-sector climate change version of the WorldScan model. Following the outcome of the UNFCCC conference in Copenhagen, it makes no specific assumptions about the future international climate regime. The analysis shows that the environmental prospects systematically improve in a transition from the Clean Development Mechanism projects towards a global carbon market, while the opposite is foreseen for the economic costs. The more of a carbon market we have when moving from the project-based CDM to sectoral crediting mechanisms and internationally linked cap-and-trade, the more finance the carbon market will channel to developing countries.


(European Economy. Economic Papers 406. March 2010. Brussels. PDF. 38pp. Tab. Graph. Bibliogr. Free.)

KC-AI-10-406-EN-N (online)
ISBN 978-92-79-14891-0 (online)
ISSN 1725-3187 (online)
doi: 10.2765/39957 (online)

JEL classification: D58, Q40, Q50, Q51

Economic Papers are written by the staff of the Directorate-General for Economic and Financial Affairs, or by experts working in association with them. The Papers are intended to increase awareness of the technical work being done by staff and to seek comments and suggestions for further analysis. The views expressed are the author’s alone and do not necessarily correspond to those of the European Commission.

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