Is a Clean Development Mechanism project economically justified? Case study of an International Carbon Sequestration Project in Iran

Abstract

The present study evaluates a carbon sequestration project for the three plant species in arid and semiarid regions of Iran. Results show that Haloxylon performed appropriately in the carbon sequestration process during the 6 years of the International Carbon Sequestration Project (ICSP). In addition to a high degree of carbon dioxide sequestration, Haloxylon shows high compatibility with severe environmental conditions and low maintenance costs. Financial and economic analysis demonstrated that the ICSP was justified from an economic perspective. The financial assessment showed that net present value (NPV) (US$1,098,022.70), internal rate of return (IRR) (21.53 %), and payback period (6 years) were in an acceptable range. The results of the economic analysis suggested an NPV of US$4,407,805.15 and an IRR of 50.63 %. Therefore, results of this study suggest that there are sufficient incentives for investors to participate in such kind of Clean Development Mechanism (CDM) projects.