Estimation Bias and Monitoring in Clean Development Mechanism Projects

Download or read book Estimation Bias and Monitoring in Clean Development Mechanism Projects written by Hui Chen and published by . This book was released on 2016 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine how monitoring reduces incentives of companies to bias reported internal rates of return in CDM projects. These estimates serve as a criterion for admission into a United Nations program that grants tradable carbon emissions permits for carbon-reducing projects in developing countries. Consistent with our expectation, we find that reported rates of return, a key factor for admission to the program, tend to be downwardly biased and are negatively associated with the forecasted carbon reduction. However, monitoring from various sources mitigates some of the distorted incentives and related misreporting.