Working Group III: Mitigation

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7.5.6 Suggestions for Improvements in the Costing Study Approach Applied to Developing Countries and Economies in Transition

Climate change studies in developing countries need to be strengthened in terms of methodology, data, and policy frameworks. Although a complete standardization of the methods is not possible, to achieve a meaningful comparison of results it is essential to use consistent methodologies, perspectives, and policy scenarios in different nations.

The following modifications to conventional approaches are suggested:

  • Alternative development pathways should be analyzed with different patterns of investment in:
    • infrastructure (e.g., road versus rail and water);
    • irrigation (e.g., big dams versus small decentralized dams, surface irrigation versus ground water irrigation);
    • fuel mix (e.g., coal versus gas, unclean coal versus clean coal, renewable versus exhaustible energy sources);
    • employment; and
    • land-use policies (e.g., modern biomass production and afforestation).
  • Macroeconomic studies should consider market transformation processes in the capital, labour, and power markets.
  • In the less developed of the developing countries, informal and traditional sector transactions should be included in national macroeconomic statistics. The value of the unpaid work of household labour for non-commercial energy collection is quite significant and needs to be considered explicitly in economic analysis.
  • Similarly, in such countries the traditional and informal sectors also account for an overwhelming proportion of agriculture and land-use activities, employment, and household energy consumption; therefore, insofar as possible, these activities should be integrated into cost studies.
  • Non-commercial energy sources, essentially traditional biomass, should be represented explicitly in the model as this has a crucial influence on both future energy flows and GHG emissions.
  • The costs of removing market barriers should be considered explicitly.

In addition to paying attention to these factors, it is important to bear in mind that perhaps the most serious limitation of cost studies for developing countries is the paucity of data. Some mitigation studies have tried to circumvent data problems by making opaque assumptions or using estimates from data that relate to different circumstances. It is preferable to use simplified approaches that provide insights into basic development drivers, structures, and trade-offs than to use standardized international models in which the data and assumptions are duplicated from industrial countries.

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