The role of public-private partnerships in local infrastructure : the case of carbon offset projects.

Summary Investment in local low-carbon infrastructure is considered an important component of the fight against climate change. Climate regulation mechanisms (such as carbon offsetting) make project developers bear the risks related to the reduction of greenhouse gas (GHG) emissions: operational, technological or environmental monitoring and regulatory risks. We show that the environmental and economic efficiency of projects depends largely on the way these risks are shared between the different actors involved in the project. On a sample of landfill gas flaring projects financed by the Clean Development Mechanism, it is shown that the delegation of technology provision creates additional risks. Delegation of the development of project documentation according to formal UNFCCC rules and the separation of the landfill operation from the CDM project appear to be manageable through the implementation of risk sharing measures.