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WP1: Indicators of Investment Climate

WP1: Indicators of Investment Climate. Robert Oleschak ECOPLAN , Economic Research and Policy Consultancy TETRIS project meeting Amsterdam 20-21 June 2006. 1 Introduction. Research Objectives. Develop a composite indicator of the investment climate for GHG abatement projects

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WP1: Indicators of Investment Climate

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  1. WP1: Indicators of Investment Climate Robert OleschakECOPLAN, Economic Research and Policy Consultancy TETRIS project meeting Amsterdam 20-21 June 2006

  2. 1 Introduction Research Objectives • Develop a composite indicator of the investment climate for GHG abatement projects • Compile indicators for a broad range of countries

  3. 1 Introduction Setting the Stage • Investment risk is (besides abatement costs)… • one of the main determinant of investment in climate change mitigation • and plays an important role in determining the distribution • Challenges in measuring investment risk: • Multidimensional nature of the concept being measured (different factors, which can interact in various ways) • Difficulty in measuring some dimensions (e.g. policy related risks) • Different perspectives across firms and activities (not all indicators being measured are important for investment in climate change mitigation)

  4. 2 Timetable and Milestones Work Package 1

  5. 3 Status of Work / Progress Against Planning Main Activities, Problems • Main activities • Review of literature has been conducted • Data has been collected • Composite indicator has been compiled • Statistical analysis has been conducted • Steps involved in compiling composite indicator have been described • Available Documents • Draft report • Delays / Difficulties • Data is fast out-of-date=> update is planned before submitting final report

  6. 4 Composite Indicator Indicator of Investment Climate – Building Blocks The indicator consists of three main building blocks: • Institutional Environment • Political / Regulatory Environment • Economic Environment

  7. 4 Composite Indicator Institutional Environment

  8. 4 Composite Indicator Political / Regulatory and Economic Environment Political / Regulatory Environment Economic Environment

  9. 4 Composite Indicator Properties of the Composite Indicator • Types of indicator • Indicator with ordinal scale: allows rating, limited information on “how much better” • Two separate indicators for Annex I and Non-Annex I countries • Geographical Scope • Very broad: 143 countries are covered (Annex I: 37; Non-Annex I: 106) • No differentiation between industries • Temporal Dimension • Snap-shot of the current situation • Last update: March 2006

  10. 4 Composite Indicator Main Results: Annex I

  11. 4 Composite Indicator Main Results: Non Annex I

  12. 4 Composite Indicator Main Results: Non Annex I

  13. 5 Methodology 5 Steps

  14. 6 Sensitivity Analysis Annex I

  15. 6 Sensitivity Analysis Non Annex I

  16. 6 Sensitivity Analysis Non Annex I

  17. 7 Linkages Linkages to other WP • Input for WP 6 (Quantitative Analysis of International Emissions Trading) • Composite Indicator is of use to investors • Results will be applied in quantitative analysis in WP6 • Linkage with WP3 (Permit Supply for the CDM) • Country-coverage of indicator has to be matched with WP3 • Transaction costs: is being incorporated into WP3 • Technological risk: Input from WP3 into WP1, but not part of the indicator

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