Climate change policy in the MENA region: prospects, challenges, and the implication of market instruments

Climate change policy in the MENA region: prospects, challenges, and the implication of market instruments

Given its harsh climate and fragile ecosystems, the MENA region is vulnerable to the physical impacts of climate change; yet, given its high dependency on hydrocarbon resources, the region is also vulnerable to the impacts of climate change response measures. This paper addresses some crucial aspects in relation to climate change policy and its impacts in the MENA.

The paper highlights the rising energy/carbon intensities in the region, the impacts of climate change response measures, the mitigation potentials in the region, and the suitability of market based instrument to harness these potentials. Consequently, it uses a Computable General Equilibrium (CGE) modeling to investigate the impacts of response measures and to explore the suitability of market-based instruments to harness mitigation potentials in the MENA.

As a result, the main policy insights drawn from the analysis are that:

  • the role of incentives to promote energy efficiency and reduce carbon emissions in the region
  • the potential gains from actively participating in the international carbon markets through the use of Clean Development Mechanism (CDM)
  • the contribution of climate policy to air quality
  • the role of green tax reforms and other sweeteners to improve the welfare economics of pursuing domestic carbon policies in the MENA
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