Climate Trading - The Clean Development Mechanism and Africa

Stellenbosch Working Paper Series No. WP12/2008
 
Publication date: 2008
 
Author(s):
[protected email address] (Department of Economics, University of Stellenbosch and North Carolina State University)
 
Abstract:

Global warming is today, without a doubt, one of the biggest international issues. Whilst no country will go completely unscathed by future consequences of climate change, the impacts thereof – in terms of loss of life as well as the relative effects on economies – are expected to be felt most severely in developing countries, specifically Africa. Nevertheless, the development of the Clean Development Mechanism (CDM) under the global environmental treaty – the Kyoto Protocol – has brought with it the potential of socially and environmentally sustainable industrial and energy development in Africa. This paper examines the carbon trading system resulting from the Kyoto protocol, and investigates the implications of the associated Clean Development Mechanism for Africa. Although the carbon market is still in its formative stages, the benefits of this research are plentiful. Not only is such research critical for raising awareness, but also ensures that African countries get a foothold in this nascent market. It is found that while producing carbon credits, CDM projects also have the potential to bring numerous benefits – such as sustainable development, transfer of skills and technology, improved adaptive capabilities, as well as access to new markets – to African host countries. If changes are implemented as suggested, the CDM has the potential to bring billions of dollars to Africa – a feat invaluable to the social and environmental development of the continent.

 
JEL Classification:

Q54, Q56, Q59

Keywords:

Clean Development Mechanism, CDM, Africa, Climate Change, Emissions Trading, Policy, Carbon Credits, Carbon Markets

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