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Carbon Offsets With Endogenous Environmental Policy

Presenter:  Jon Strand, Development Research Group, World Bank (
Time:        Thursday, May 6, 2010, 12:30 to 2:00 P.M.

Location:   J 4-044


Interests in obtaining carbon offsets in host countries for CDM projects may make it harder to implement more stringent general environmental policies in the same countries. A lax environmental policy, with high carbon emissions, can be advantageous for such countries as it leaves them with a higher than otherwise scope for emissions reductions through offset projects. I here show that the potential to affect future CDM project possibilities may affect environmental and energy policies of CDM host countries, in two main ways.  First, incentives to tax (or remove subsidies on) fossil energy are weakened.  Secondly, since private-sector incentives to switch to lower-carbon technologies are weakened by the former policies, host governments also find it attractive to subsidize this switch directly.

Seminar Paper

Presenter's Bio:
JON STRAND is Senior Economist in the Development Research Group, Environment and Energy Team, in the World Bank. His work area is environmental and energy economics, focusing on climate-related issues. He also holds (and is currently on leave from) a chair as professor of economics at the University of Oslo. Within the fields of environmental, resource and energy economics, his main topics for research have been environmental valuation using both nonmarket and market methods, including the valuation of statistical life; natural resource extraction issues focusing on developing countries; and environmental policy design issues including environmental tax policy and climate policy. He has published widely, with about 60 published articles in international economics journals. He has served as consultant for the OECD, the World Bank and the Inter-American Development Bank in environmental policy matters. During 2005-2008, he worked in the Fiscal Affairs Department of the IMF, as the Fund’s environmental economist.

Contact:    Hua Wang,, 202-473-3255

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