Options for International Financing of Climate Change Mitigation in Developing Countries

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 union eu annex I non-annex I climate conference in Copenhagen climate change mitigation clean development mechanism emission trading system the US brazil china india own participation of developing countries sectoral crediting mechanisms hayden Veenendaal Zarnic