7.5.6 Suggestions for Improvements in the Costing Study Approach Applied to
Developing Countries and Economies in Transition
Climate change studies in developing countries need to be strengthened in terms
of methodology, data, and policy frameworks. Although a complete standardization
of the methods is not possible, to achieve a meaningful comparison of results
it is essential to use consistent methodologies, perspectives, and policy scenarios
in different nations.
The following modifications to conventional approaches are suggested:
- Alternative development pathways should be analyzed with different patterns
of investment in:
- infrastructure (e.g., road versus rail and water);
- irrigation (e.g., big dams versus small decentralized dams, surface
irrigation versus ground water irrigation);
- fuel mix (e.g., coal versus gas, unclean coal versus clean coal, renewable
versus exhaustible energy sources);
- employment; and
- land-use policies (e.g., modern biomass production and afforestation).
- Macroeconomic studies should consider market transformation processes in
the capital, labour, and power markets.
- In the less developed of the developing countries, informal and traditional
sector transactions should be included in national macroeconomic statistics.
The value of the unpaid work of household labour for non-commercial energy
collection is quite significant and needs to be considered explicitly in economic
- Similarly, in such countries the traditional and informal sectors also account
for an overwhelming proportion of agriculture and land-use activities, employment,
and household energy consumption; therefore, insofar as possible, these activities
should be integrated into cost studies.
- Non-commercial energy sources, essentially traditional biomass, should be
represented explicitly in the model as this has a crucial influence on both
future energy flows and GHG emissions.
- The costs of removing market barriers should be considered explicitly.
In addition to paying attention to these factors, it is important to bear in
mind that perhaps the most serious limitation of cost studies for developing
countries is the paucity of data. Some mitigation studies have tried to circumvent
data problems by making opaque assumptions or using estimates from data that
relate to different circumstances. It is preferable to use simplified approaches
that provide insights into basic development drivers, structures, and trade-offs
than to use standardized international models in which the data and assumptions
are duplicated from industrial countries.