Reconciling the design of CDM with inborn paradox of additionality concept

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Abstract
Additionality of greenhouse gas emission reduction achieved through projects in developing countries has beena matter of heated debate for quite some time. Michael Grubb succintly summarized the inborn paradox of the additionality concept. It reads: “the most ‘cost-effective’ projects may be the least ‘additional’ and strict project additionality would give perverse policy incentives”. The authors begin with elaborating this notion. The dilemmafor policy makers is that, despite the paradox, Kyoto regime desperately needs flexibility to reconcile its ambitious target with difficulties in implementing domestic policies and measures. The solution to it is to give a certain degree of discretionary elements to each party in designing criteria for clean development mechanism (CDM) projects. Such institutional design works because parties do not behave like an economic man but do have propensity to faithfully comply in a tightly woven international interdependence structure as the experience of past mul...