This report examines the impact of international mitigation policies on economic opportunities in developing countries.  Understanding these impacts is important: so developed country policymakers can take these effects into account in their decision making; to help inform developing countries’ negotiating strategies; and so developing countries can start now to position themselves to take advantage of new opportunities or protect themselves from new risks arising from mitigation.

A range of mitigation policies are considered, including: carbon taxes, border tax adjustments, emissions trading schemes, the Clean Development Mechanism, REDD+, liberalisation of trade in environmental goods and services, carbon labelling and technology transfer mechanisms.  The potential economic impacts of these different policies are assessed, by examining the various transmission mechanisms, such as trade, foreign direct investment, aid and financial flows, rates of technological innovation and technology transfer, changes in consumer preferences, and private sector responses. 

Three broad scenarios are developed, based on:

1. high levels of international cooperation,
   
2. moderate levels of international cooperation, and
   
3. fragmented bilateral and regional cooperation.
   

Each scenario consists of different packages of mitigation policy outcomes, in order to facilitate an illustrative assessment of the overall impact of different mitigation policy combinations on economic prospects in developing countries.

Karen Ellis, Nicola Cantore, Jodie Keane, Leo Peskett, David Brown and Dirk Willem te Velde