Question

According to Bumpus and Liverman, what is the difference between Clean Development Mechanism (CDM) and Voluntary Carbon Offset (VCO) markets?

a) CDM is regulated by governments, while VCO is voluntary for businesses
b) CDM is focused on individual actions, while VCO is for large corporations
c) CDM is for industrial countries, while VCO is for developing nations
d) CDM is legally binding, while VCO is based on market-driven initiatives

Answer 1

The difference between CDM and VCO, as explained by Bumps and Liveryman, is that CDM is a regulated mechanism under the Kyoto Protocol and legally binding, whereas VCO operates as voluntary, market-driven initiatives without legal obligations.

Step-by-step explanation:

According to Bumps and Liveryman, the Clean Development Mechanism (CDM) and Voluntary Carbon Offset (VCO) markets differ primarily in terms of regulation and participation. The CDM is regulated by governments and is a component of the Kyoto Protocol, which allows industrialized countries to invest in emission reduction projects in developing countries as a way to meet their own emission reduction targets. On the other hand, the VCO is a market-based initiative where participation is voluntary for businesses, individuals, or other entities seeking to offset their carbon footprint without a legal requirement to do so.

The correct answer to the question is: d) CDM is legally binding, while VCO is based on market-driven initiatives. This highlights the regulatory nature of CDM under the Kyoto Protocol versus the voluntary aspect of VCO markets.