The Review of International Organizations

, Volume 6, Issue 3–4, pp 259–286 | Cite as

Climate business for poverty reduction? The role of the World Bank

  • Axel Michaelowa
  • Katharina MichaelowaEmail author


The World Bank is increasingly active in the area of climate change mitigation. While it justifies this engagement with its poverty reduction objective and its capacity to pave the way for new business activities in developing countries, critics blame the World Bank as a “climate profiteer” and as an unfair competitor in private markets. Our econometric analysis of over 2,000 projects registered until May 2010 under the Clean Development Mechanism (CDM) of the Kyoto Protocol allows us to compare the activities of the Bank with those of other, primarily private actors. The results indicate that hardly any of the CDM projects can be considered as strongly pro-poor. Nevertheless, in comparison to the rest of the CDM projects, the Bank’s portfolio shows a relatively clearer orientation towards poor countries. Within these countries, however, the Bank does not show any particular pro-poor focus, and tends to implement those projects that are commercially most attractive. Moreover, there is no evidence of the Bank phasing out its activities once the market becomes fully operational, which goes against its professed pioneering and catalytic role in carbon markets.


Clean Development Mechanism (CDM) World Bank Climate policy Carbon market Poverty reduction Allocation of resources Competition Political economy Recipient need versus donor interest 

JEL codes

O13 O19 Q54 Q56 



We thank two anonymous referees and the participants of the Egon Sohmen Memorial Conference on the “Political Economy of International Financial Institutions,” 10–13 June, 2010, Tübingen, for all their helpful and constructive suggestions. Special thanks go to Catherine Weaver for her detailed and thoughtful comments that led us to dig a little deeper into the “black box” of the World Bank. Finally, we thank Christopher Humphrey who helped us to improve the writing, and to reflect about some further interpretations of Bank behavior.

Supplementary material


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Copyright information

© Springer Science + Business Media, LLC 2011

Authors and Affiliations

  1. 1.Center for Comparative and International Studies (CIS)University of ZurichZurichSwitzerland

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