The Incremental Cost of Climate Change Mitigation Projects

Global Environment Facility Working Paper No. 9. Develops a classification system of options to reduce the risk of climate change. This paper clarifies certain misconceptions related to imcremental costs by presenting a clear methodology for estimating the difference or "increment" between the costs of 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...
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Global Environment Facility Working Paper No. 9. Develops a classification system of options to reduce the risk of climate change. This paper clarifies certain misconceptions related to imcremental costs by presenting a clear methodology for estimating the difference or "increment" between the costs of 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 economically viable alternative and how baseline project costs avoided by GEF intervention still 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 varying structures of system boundaries and baselines and the influence of local factors on cost estimates. This paper should be a useful tool for those involved in the field of environmental economics and management.