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Integrating sustainability into climate finance by quantifying the co-benefits and market impact of carbon projects

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Abstract: High-quality development rooted in low-carbon growth, new jobs, energy security, and environmental quality will be a critical part of achieving multiple sustainable development goals (SDGs). Doing this will require the dramatic scaling up of new climate finance while maximizing co-benefits across multiple outcomes, including for local communities. We developed a comprehensive methodology to identify different levels of local co-benefits, followed by an econometric analysis to assess how the market values co-benefits through the clean development mechanism. We find that projects with a likelihood of delivering the highest co-benefits received a 30.4% higher price compared to projects with the lowest co-benefits. Project quality indicators such as the Gold Standard, in conveying higher likelihood of co-benefits, conferred a significant price premium between 6.6% and 29%. Our methodology of aligning co-benefits with SDGs and the results of co-benefits valued by the markets indicate approaches to bolstering social and political support for climate finance.

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School Authors: Leon Clarke, Yiyun 'Ryna' Cui, James 'Jae' Edmonds, Sha Yu, Alicia Zhao

Other Authors: Cornelia Auer, Ryan Barrett, Antoine Boirard, Renaud Concordet, Jérôme Hilaire, Otso Manninen, Thessa Beck, David Bresch, Christoph Bertram, Molly Charles, Dawn Holland, Ian Hurst, Elmar Kriegler, Chahan Kropf, Iana Liadze, Theresa Löber, Franziska Piontek, Jihoon Min, Edo Schets, Inga Sauer, Carl-Friedrich Schleussner, Bas van Ruijven

School Authors: Leon Clarke, Yiyun 'Ryna' Cui, James 'Jae' Edmonds, Sha Yu

Other Authors: Thomas Allen, Cornelia Auer, Ryan Barrett , Christoph Bertram, Antoine Boirard, Stephane Dees, Jerome Hilaire, Elmar Kriegler, Theresa Lober, Jihoon Min, Franziska Piontek, Joeri Rogelj, Edo Schets, Carl-Friedrich Schleussner, Bas van Ruijven, Cristina Angelico, Rie Asakura, Ivan Faiella, Philipp Haenle, Craig Johnston, Federico Lubello, Simone Russo