Climate Change in Latin America and the Caribbean: A Review of the Bonn and Marrakech Decisions and Their Effect on the Clean Development Mechanism of the Kyoto Protocol

This working paper presents an overview of recent climate change developments, in particular with regards to carbon markets under the Clean Development Mechanism (CDM). The first section of this paper describes the history of the climate change negotiations. Section two presents an overview of the recent decisions adopted at the last international meetings (Bonn Agreements and Marrakech Accord), which have improved the odds of ratification of the Kyoto Protocol by 2002. The third section analyzes the carbon credit market. The first part of the carbon credit section briefly presents the available information regarding real carbon credit transactions, while the second part focuses on the literature review of several theoretical models and presents the theoretical estimates of the price and size of the carbon market.