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The incremental cost of climate change mitigation projects
This paper represents the first steps in the development of a framework for measuring the incremental costs of climate change mitigation projects by the Global Environmental Facility (GEF). The GEF is a financial mechanism that provides grants to developing countries for the incremental cost of proj...
This paper represents the first steps in the development of a framework for measuring the incremental costs of climate change mitigation projects by the Global Environmental Facility (GEF). The GEF is a financial mechanism that provides grants to developing countries for the incremental cost of projects aimed at protecting the global environment. The paper develops a taxonomy of potential options to reduce the risk of climate change, and clarifies certain misconceptions related to incremental cost by presenting a clear methodology for estimating the difference or " increment " between the costs of five projects that a country might undertake, and the costs of possible GEF interventions to incorporate global environmental benefits. The author demonstrates how incremental costs can be incurred even in an alternative that is economic, and how baseline project costs avoided by an intervention constitute a legitimate part of the calculation of costs. The paper stresses the need for a case-by-case approach in the evaluation of projects because of the different ways in which system boundaries and baselines can be constructed, and the influence of local factors on cost estimates.
