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Risk Management in the Clean Development Mechanism (CDM) – The Potential of Sustainability Labels

Author

Listed:
  • Muller, Adrian

    (Department of Economics, School of Business, Economics and Law, Göteborg University)

Abstract

There is a danger that the CDM will fail to live up to its goals, namely reduction of greenhouse gas emissions and enhanced sustainable development. Sustainability labeling is a promising strategy to hedge against such failures. Labels could also serve as a business risk-hedging tool. The existing labels for the CDM are not comprehensive enough, however. A two-tiered stakeholder participatory approach with national flexibility under an international umbrella could be a promising option. Due to the necessary bureaucracy this might not be feasible. Labels in the spirit of the existing approaches – addressing only restricted aspects of sustainability or not applicable to all sectors may be a second best option. Other instruments for the further regulation of the CDM, such as a profit tax, should therefore be discussed as well.

Suggested Citation

  • Muller, Adrian, 2006. "Risk Management in the Clean Development Mechanism (CDM) – The Potential of Sustainability Labels," Working Papers in Economics 228, University of Gothenburg, Department of Economics.
    • Handle: RePEc:hhs:gunwpe:0228
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    File URL: http://hdl.handle.net/2077/2689
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    References listed on IDEAS

    as
    1. Bouwe R. Dijkstra, 1999. "The Political Economy of Environmental Policy," Books, Edward Elgar Publishing, number 1636, December.
    2. Joop de Boer, 2003. "Sustainability labelling schemes: the logic of their claims and their functions for stakeholders," Business Strategy and the Environment, Wiley Blackwell, vol. 12(4), pages 254-264, July.
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    Cited by:

    1. Nussbaumer, Patrick, 2009. "On the contribution of labelled Certified Emission Reductions to sustainable development: A multi-criteria evaluation of CDM projects," Energy Policy, Elsevier, vol. 37(1), pages 91-101, January.
    2. Parnphumeesup, Piya & Kerr, Sandy A., 2011. "Classifying carbon credit buyers according to their attitudes towards and involvement in CDM sustainability labels," Energy Policy, Elsevier, vol. 39(10), pages 6271-6279, October.
    3. Drupp, Moritz A., 2011. "Does the Gold Standard label hold its promise in delivering higher Sustainable Development benefits? A multi-criteria comparison of CDM projects," Energy Policy, Elsevier, vol. 39(3), pages 1213-1227, March.

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    More about this item

    Keywords

    CDM; labels; sustainability indicators; risk; equity;
    All these keywords.

    JEL classification:

    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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