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Research to assess impacts on developing countries of measures to address emissions in the international aviation and shipping sectors

The greenhouse gas emissions of international aviation and maritime transport are projected to increase rapidly over the coming decades, despite significant improvements in the fuel-efficiency of aircraft and ships. In order to address their growth, Market Based Measures (MBMs) have been proposed to complement technical and operational measures. These measures are being discussed in ICAO (the UN organization for civil aviation) and IMO (the UN organization for maritime transport). One of the main issues in the debate has been the impact of MBMs on developing countries and especially on remote economies.
 
This report quantifies the economic impacts of MBMs on ten case study economies and globally. The case study economies have been selected in the expectation that  they would be relatively highly impacted because of their remoteness and/or dependence on international aviation or maritime transport. This report shows that the decrease in GDP is less than 0.01% on average and significantly less than 0.1% for all but a few of the case study countries. Countries with a higher dependency on tourism and trade are likely to experience greater economic impacts as market-based measures raise the costs of aviation and maritime transport; they impact economies due to increased prices for passenger travel and exported and imported goods. Some of these countries are small island states that are also vulnerable to climate change impacts. 
 
Undesired economic impacts on developing countries can be addressed effectively by a combination of measures such as exemptions of certain routes, lump sum rebates, and investments in infrastructure efficiency and development of more efficient ships and aircraft.
 
This report has been written by a consortium of Climate Strategies, University of Cambridge, Cambridge Econometrics, CE Delft and Transport Analysis and Knowledge Systems (TAKS).

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