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Are We Really Getting Into the Green Scene? Investigating the Effects of Kyoto Protocol Mechanisms on the Environment and Economy

The world has changed drastically in favor of the human race as the processes of production improve, leading to the stimulation of economic growth. However, we failed to consider how these changes affect the environment, causing pollution levels to rise due to it being an unavoidable by-product of production. Eventually, nations were driven to develop a strategy to combat climate change and increase greenhouse gas emissions in the form of the Kyoto Protocol. This research compares two of the Kyoto Protocol Mechanisms, specifically the Clean Development Mechanism (CDM) and the Emissions Trading Scheme (ETS), to investigate the effect of such mechanisms on the economic growth and the greenhouse gas emissions of developed and developing countries that have chosen to adopt their specific mechanism. The research utilizes a panel data regression model and the difference-in-difference (DID) model in quantifying the contribution rate of the country-specific economic indicators and the effect of the Kyoto protocol mechanisms on developed and developing countries. Findings from the study depict the ineffectiveness of the aforementioned mechanisms for most of the developed and developing countries, given that the drivers in pursuit of viable development vary in different areas. In assessing the findings, we have provided aspects to consider for the extension of the study on investigating emission reduction approaches. Policy insights were also devised for leaders and institutions that aim to mitigate emissions further.


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