How to Improve the Likelihood of CDM Approval? Institutional shortcomings and the Case of West Africa

Abstract

How can the likelihood of Clean Development Mechanism (CDM) approval be improved in the face of institutional shortcomings? To answer this question, we focus on the three institutional shortcomings of income sharing, risk sharing and corruption prevention concerning afforestation/reforestation (A/R). Furthermore, three main stakeholders are identified, namely investors, governments and agents in a principal-agent model regarding monitoring and enforcement capacity. Developing countries such as West Africa have, despite huge potentials, not been integrated in A/R CDM projects yet. Remote sensing, however, appears to be an effective tool to overcome the three institutional shortcomings. Thus, a pilot project should be considered in near future to develop a best practice system.