Developed countries motivation to invest in greenhouse gas emission-reduction projects in developing countries is based on their desire to reduce air pollution they receive from abroad and keep transaction costs down, rather than to achieve global-scale pollution reductions. This analysis1 by Nives Dolsak and Maureen Dunn, from the University of Washington-Bothell, in the US, has been published in Springers journal Policy Sciences.
Dolsak and Dunn examine Activities Implemented Jointly (AIJ) under the 1992 United Nations Framework Convention on Climate Change (prior to the Kyoto Protocol), which sought to first stabilize, then reduce global greenhouse gas emissions. Sponsoring countries invest in greenhouse gas emission-reduction projects in other countries. However, the investing countries do not earn emission reduction credits from this financing. So why do they do it, and how do they choose which country to invest in"
Dolsak and Dunns statistical analysis, based on econometric techniques, shows that investment decisions are not motivated by philanthropy, but rather by economics. It makes sense for developed (or home) countries to test mechanisms through which developing (or host) countries can gain scarce capital and energy efficient technologies, while home countries meet reduction targets at a lower cost. In effect, home countries use host countries as "policy laboratories" in the event that such investments might lead to emission credits under future regimes. To keep the costs down, home countries are likely to locate AIJ projects in host countries with which they have had prior trade exchanges.
For energy projects, such as Japans investment to improve energy efficiency in Chinas metal industry, location decisions are driven by home countries desire to reduce air pollution from coal-fired power plants that they receive from neighboring countries. The same applies to AIJ projects in Eastern European transition countries
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Contact: Joan Robinson
joan.robinson@springer.com
49-622-148-78130
Springer
14-Dec-2006