Pakistan Institute of Development Economics



Clean Development Mechanism (CDM) Business in Pakistan: Perceptions and Realities

Climate change is the biggest challenge human family has ever faced in world history. It has local as well as global impacts and almost all the ethnic groups, communities, and geographical locations are exposed to it [Stern (2006)]. But comparatively developing countries are more exposed to the changes which are taking places due to climate [Stern (2006) and Barker (2008)]. The degree of their exposure which has a number of determinants varies across different regions [Karen, et al. (2004)]. Climate experts so far have proposed two broader solutions for this problem; mitigation of climate change by reducing the amount of emitted carbon from atmosphere, and adaptation to climate changes [Tompkins and Adger (2005) and Becken (2005)]. Kyoto Protocol of the United Nations Framework Convention on Climate Change (UNFCCC) is dealing with climate change mitigation. It is the milestone towards global carbon mitigation efforts [Miriam, et al. (2007)]. This protocol has resulted in the establishment of carbon markets by adopting the Clean Development Mechanism (CDM). Pakistan ratified the Kyoto Protocol in 1997 and implemented it in 2005. To ensure the smooth functioning of carbon trading business in Pakistan, CDM related infrastructure was developed. Mainly this includes the establishment of CDM Cell in Pakistan, but a number of private consultancies also came into being with the emergence of this mechanism.