Transaction costs and risk have generally not been taken into account in assessing the Kyoto mechanisms JI, CDM and emissions trading. However, they can have a significant influence. With regard to the project-based mechanisms, the factor that most determines the influence of transaction costs...

The authors suggest a multi-layered system of three convergence criteria - similar to those used in the run-up to the European monetary union - that define the notion of "demonstrable progress" towards reaching the emission commitments under the Kyoto Protocol. These are the existence of an...