Multicriteria evaluation of investment opportunities for the exploitation of the flexible mechanisms of the kyoto protocol

The aim of the present paper is to investigate investment opportunities and potential benefits associated with the implementation of the Flexible Mechanisms provided by the Kyoto Protocol in Greece. The emphasis is given to the Clean Development Mechanism (CDM). This mechanism allows for an Annex-I country to get credits of greenhouse gas emissions reduction units (CERs) through investments in developing countries. The result is beneficial not only for the global environment but also for the economy of the two countries: of the investing country because of the CERs and other economic profits gained, and of the host country because of the realized investment and the associated side-effects including technology transfer. The paper is addressing 3 questions regarding the prospects for the exploitation of CDM by Greece: in which country, what kind of investment, with which economic and environmental return. The proposed approach includes 3 interrelated steps based on the combined exploitation of multicriteria analysis and traditional financial analysis. In the 1st step candidate host countries are evaluated by taking into account country-specific criteria, such as their compliance with the Kyoto Protocol, their political stability etc. In the 2nd step candidate projects in each country are evaluated on the basis of technoeconomic and legislative aspects, while the most highly ranked projects are evaluated in the P step through a conventional financial analysis that takes into account the additional revenues raised by the expected CERs. The obtained results are useful in that they indicate interesting investment opportunities for Greek firms and can be used to support relevant investment decisions. In addition to the numerical findings, the paper is intended to highlight the significance of the flexible mechanisms of the Kyoto Protocol, the key-issues that should be taken into account for the practical exploitation of the CDM, and also the usefulness of multicriteria analysis as a decision support tool.