In economics, pollution is looked at as negative externality which induces cost into a system for almost everyone. Fortunately, a host of measures are being devised to address pollution on communal, national and international levels. The Clean Development Mechanism (CDM) is one such measure, but has quite a few problems associated with it, which shall be the concern of this post. I will outline the mechanism, elaborate on its function and then consider Hepburn’s problem of CER markets.
The CDM (full version – pdf)