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| Author: | Springer, U. |
| Title: | Can the risks of the Kyoto mechanisms be reduced through portfolio diversification? Evidence from the Swedish AIJ program |
| Journal: | Environmental and Resource Economics
2003 : AUG, VOL. 25:4, p. 501-513 |
| Index terms: | Air pollution Portfolio management Risk management Energy companies Sweden |
| Freeterms: | Clean development mechanism |
| Language: | eng |
| Abstract: | The author describes three types of risks which emission reduction projects are exposed to. Actual project costs are found to exceed projected costs in all cases. Annual emission reductions also deviate from their expected values and vary strongly over time, supporting emission reductions also deviate from their expected values and vary strongly over time, supporting the hypothesis that such projects are risky business. The risk management tool portfolio diversification is applied to a sample of Swedish AIJ projects. The results indicate that diversification can reduce the risks of greenhouse gas mitigation projects significantly. Thus carbon funds are a promising way of lowering the risks of the Kyoto Mechanisms for private sector investors. |
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