The potential of the CDM to deliver pro-poor benefits

Abstract

The potential of Clean Development Mechanism (CDM) projects to deliver pro-poor benefits at the community level is examined. Both regular CDM and premium add-on standard projects are evaluated, including the Gold Standard and Climate, Community and Biodiversity (CCB) Standard, through the use of seven poverty indicators. Some key characteristics associated with providing pro-poor benefits are also identified. Finally, the market potential of a revised or new premium add-on standard explicitly designed to deliver pro-poor benefits is assessed through the use of a survey. The results indicate that regular CDM projects are only moderately successful at delivering pro-poor benefits. Although the few projects registered that utilize the CCB Standard all performed well in delivering pro-poor benefits, those that used the Gold Standard performed only slightly better than regular CDM projects. Characteristics associated with providing pro-poor benefits include the use of add-on standards, a high level of stakeholder participation, and the development of projects by not-for-profit and government/intergovernmental organizations. The survey of carbon market participants indicated both an interest and desire for Certified Emission Reduction (CER) credits with pro-poor benefits attached and shows that the market potential for such a standard to be quite good.

Policy relevance

This analysis of the CDM goes beyond sustainable development to consider the potential of a project to deliver pro-poor benefits at the local community level. Specific characteristics associated with projects are identified that appear to deliver pro-poor benefits that may benefit future project design. Through this analysis and identifying these characteristics, actions may be taken to incorporate those into CDM project requirements or guidelines to advance the mechanism as a means to contribute to poverty alleviation.

Keywords:

• carbon markets
• carbon offsets
• Clean Development Mechanism
• poverty alleviation
• sustainable development

Acknowledgements

The author provided consulting services to Nexus after the research and article were completed. However, the author had no association with Nexus during the research.

Notes

A CER represents the mitigation of 1 tonne of CO₂e. CO₂e is used to account for the different Global Warming Potentials of the different GHGs and presents them as equivalent to one unit of CO_2.

The decision adopted at the UNFCCC climate change negotiations in Durban stated that the second commitment period will end in either 2017 or 2020 and that the decision will be made by the Ad Hoc Working Group on Further Commitments for Annex I Parties under the Kyoto Protocol at its Seventeeth Session.

This count was based on the CDM Pipeline database, available at www.cdmpipeline.org.

For systematic sampling, data about the 839 projects were downloaded and a spreadsheet was created. The data were then sorted by project number, and every tenth project was selected. The resulting list of 83 projects was then supplemented by purposive sampling to include a better representation of countries, with a particular focus on including projects from Africa, and project types.

Land-based projects are forest protection, afforestation, reforestation, agriculture, or agroforestry projects.

Categorized based on the UNFCCC CDM Methodology Booklet and encompassing Renewable Energy, GHG Destruction, Energy Efficiency, Fuel Switch, Emissions Avoidance, and Afforestation/Reforestation.