Abstract
This paper examines how bilateral ties between developed (home) countries and developing (host) countries influence the location of Clean Development Mechanism projects (CDMs). With the home-host country pair as the unit of analysis (2,058 country-pairs), we employ a logistic regression model to analyze decisions of home countries in selecting the location for their CDMs. We are most interested in examining how home countries’ familiarity with the host country influences CDM location decisions. The familiarity factors are: (1) colonial history; (2) bilateral trade; and (3) bilateral aid. Using a binary logistical model, we find that that bilateral familiarity factors strongly influence CDM location decisions. Further, with respect to host country characteristics, we find that total carbon dioxide emissions and UNFCCC specific domestic institutions influence CDM location decisions, but not general investment institutions or high carbon intensity of host country economies.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
Notes
In addition to the objectives stated in the regime, CDMs also may foster interests of the home country’s industries as these projects enable contractors from the home country to do work in the host country.
For empirical studies on positive spillovers see Ahlquist and Prakash (2008).
http://www.oecd.org/dataoecd/10/16/2090148.pdf; 04/15/2009
See Jung (2006), Feng (2001), and Point Carbon (http://www.pointcarbon.com/http://www.pointcarbon.com/Research%20&%20Advisory/Ratings/category.php?categoryID=323)
While there is no clear interpretation of values other than 0 and 1 and no clear standard by which to judge it, we can say that models with a higher R2 McF are preferred (Long 1997).
References
Ahlquist J, Prakash A (2008) The influence of foreign direct investment on contracting confidence in developing countries. Regul Govern 2(3):316–339
Axelrod R (1984) The evolution of cooperation. Basic Books, New York
Bengal R (2008) “Drivers of Outward Foreign Direct Investment from Asian Developing Economies.” http://www.unescap.org/tid/publication/tipub2469.asp. Downloaded on December 8, 2012
Breitmeier H, Young OR, Zuern M (2006) Analyzing international environmental regimes: from case study to database. MIT Press, Cambridge, MA
Campbell NC et al (1988) Marketing negotiations in France, Germany, United Kingdom, and the United States. J Mark 52(April):49–62
Caves RE (1996) Multinational enterprise and economic analysis, 2nd edn. Cambridge University Press, Cambridge
Davidson WH (1980) The location of foreign direct investment activity: country characteristics and experience effects. J Int Bus Stud 11(2):9–22
De Groot HLF et al (2004) The institutional determinants of bilateral trade patterns. Kyklos 57(1):103–123
Dechezlepretre A, Glachant M, Meniere Y (2008) The clean development mechanism and the international diffusion of technologies. Energ Pol 36(4):1273–1283
Dolšak N (2009) Climate change policy implementation. Rev Pol Res 26(5):551–570
Dolšak N, Dunn M (2006) Investments in global warming mitigation. Pol Sci 39(3):233–248
Dolšak N, Brondizio ES, Carlsson L, Cash DW, Gibson CC, Hoffmann M, Knox A, Meinzen-Dick R, Ostrom E (2003) Adaptations to challenges. In: Dolšak N, Ostrom E (eds) The commons in the new millennium. MIT Press, Cambridge, pp 337–360
Drupp MA (2011) Does the gold standard label hold its promise in delivering higher sustainable development benefits: a multi-criteria comparison of CDM projects. Energ Pol 39(3):1213–1227
Dunning JH (1981) International production and the multinational enterprise. Allen and Unwin, Boston
Feng Y (2001) Political freedom, political instability, and policy uncertainty. Int Stud Q 45:271–294
Georgiou P, Tourkolias C, Diakoulaki D (2008) A roadmap for selecting host countries of wind energy projects in the framework of the clean development mechanisms. Renew Sustain Energ Rev 12(3):712–731
Greif A, Milgrom P, Weingast B (1994) Coodination, commitment, and enforcement. J Polit Econ 102(4):745–776
Huang Y, Barker T (2012) The clean development mechanism and low carbon development. Energ Econ 34(4):1033–1040
IPCC. Intergovernmental Panel on Climate Change (2001) Third Assessment Report. Retrieved July 27, 2006, from http://www.ipcc.ch/
Jung M (2006) Host country attractiveness for CDM non-sink projects. Energ Pol 34(2006):2173–2184
Kimura H, Todo Y (2010) Is foreign Aid a vanguard of foreign direct investment? World Dev 38(4):482–497
Long SJ (1997) Regression models for categorical and limited dependent variables. Sage Publications, Thousand Oaks
Luterbacher U, Sprinz DF (2001) International relations and global climate change. MIT Press, Cambridge
McMillan J, Woodruff C (2000) Private order under dysfunctional public order. Mich Law Rev 98(8):2421–2457
McNish T et al (2009) Sweet carbon. Energ Pol 37(12):5459–5468
Michaelowa A (2002) The AIJ pilot phase as laboratory for CDM and JI. Int J Global Environ Issues 2(2002):260–287
Michaelowa A, Jotzo F (2005) Transaction costs, institutional rigidities and the size of the clean development mechanisms. Energ Pol 33:511–523
Miles EL, Underdal A, Andresen S, Wettestad J, Skjaerseth JB, Carlin EM (2002) Environmental regime effectiveness: confronting theory with evidence. MIT Press, Cambridge, MA
Mody, A, Assaf R, Effraim S (2003) “The role of information in driving FDI flows.” NBER working paper no. 9662
North DC (1990) Institutions, institutional change and economic performance. Cambridge University Press, New York
Ostrom E, Dietz T, Dolšak N, Stern PC, Stonich S, Weber EU (eds) (2002) The drama of the commons. Committee on the human dimensions of global change. National Academy Press, Washington, DC
Powell M, Lile R, Toman M (1997) Assessing the constraints and opportunities for private-sector participation in activities implemented jointly. Resources for the Future, Washington DC
Raftery AE (1996) Bayesian model selection in social research. In: Marsden PC (ed) Sociological methodology. Basil Blackwell, Oxford, pp 111–163
Selaya P, Sunesen ER (2012) Does foreign aid increase foreign direct investment? World Dev 40(11):2155–2176
Seres S, Haites E, Murphy K (2009) Analysis of technology transfer in CDM projects. Energ Pol 37(11):4919–4926
Springer U (2003) Can the risks of the Kyoto mechanisms be reduced through portfolio diversification? Environ Resour Econ 25:501–513
Tadesse B, White R (2009) Cultural distance as a determinant of bilateral trade flows. Appl Econ Lett 17(2):147–152
Tse DK et al (1988) Does culture matter? J Mark 52(March):81–95
Victor D (2001) The collapse of the Kyoto protocol and the struggle to slow global warming. Princeton University Press, Princeton
World Bank (2002) World development report: building institutions for a market. Oxford University Press, New York
Young O (ed) (1999) The effectiveness of international environmental regimes: causal connections and behavioral mechanisms. MIT Press, Cambridge, MA
Author information
Authors and Affiliations
Corresponding author
Appendix: description of independent variables
Appendix: description of independent variables
1.1 Aid
Total bilateral net aid (total official development aid) given by the developed country to the developing country in year 1990 (1993 for countries that did not exist in 1990). In millions US Dollars.
Source: OECD, International Development Statistics; Destination of Official Development Assistance and Official Aid-Disbursements (Table 2a). http://www.oecd.org/dataoecd/50/17/5037721.htm, accessed on July 29, 2005.
1.2 Very attractive hosts
Dichotomous variable, indicating whether the host country is a “very attractive” host country for CDM non-sink projects (Jung’s cluster 1).
Source: Jung (2006)
1.3 Moderately attractive Hosts
Dichotomous variable, indicating whether the host country is an “attractive” CDM host (Jung’s cluster 2).
Source: Jung (2006)
1.4 Somewhat attractive hosts
Dichotomous variable, indicating whether the host country is “attractive to limited extent” (Jung’s cluster 3).
Source: Jung (2006)
1.5 Host AIJ
Dichotomous variable, indicating whether the host country has hosted any AIJs prior to 2002, the last year any AIJs were initiated.
Source: UNFCCC
http://unfccc.int/kyoto_mechanisms/aij/activities_implemented_jointly/items/2094.php, accessed on September 6, 2005.
1.6 Host colony
A dichotomous variable, indicating whether the host country was the home country’s colony.
Source: CIA. The World Fact book. https://www.cia.gov/cia/publications/factbook/, accessed on December 15, 2006.
1.7 Host CO2 emissions
Host country’s carbon dioxide emissions in year 2000 in thousand tones.
Source: The World Bank Group. World Development Indicators. WDI Online.
1.8 Host CO2 GDP
Host country’s carbon dioxide emissions in year 2000 per dollar of GDP, in thousand tones per dollar of GDP (PPP, constant 2000 international dollars).
Source: The World Bank Group. World Development Indicators. WDI Online.
1.9 Host investment
It measures how freely investment capital, especially foreign capital, flows in host countries. Source: Heritage Foundation.
http://www.heritage.org/index/, accessed on February 20, 2007.
1.10 Host national communication
Dichotomous variable, indicating whether the host country has submitted a National Communication to the Secretariat of the UNFCCC by year 2005.
Source: UNFCCC
http://unfccc.int/national_reports/non-annex_i_natcom/submitted_natcom/items/653.php, accessed on March 7, 2006.
1.11 Trade
Bilateral trade as reported by the developed country in the country pair in year 1993, in thousands of US Dollars.
Source: OECD, International Trade by Commodity Database. http://new.sourceoecd.org/vl=8591365/cl=13/nw=1/rpsv/statistic/s15_about.htm?jnlissn=16081218, accessed on July 16, 2005.
Rights and permissions
About this article
Cite this article
Dolšak, N., Crandall, E.B. Do we know each other? Bilateral ties and the location of clean development mechanism projects. Climatic Change 118, 521–536 (2013). https://doi.org/10.1007/s10584-013-0694-7
Received:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s10584-013-0694-7