Meeting the goals of the Paris Agreement requires a large-scale transformation of the structure of economic activity, and this also requires careful design of climate policy. As the High-Level Commission on Carbon Pricing points out, appropriate carbon pricing is an indispensable part of the strategy to reduce emissions efficiently, which can be complemented by shadow pricing of public sector activities. In most national public investment systems in Latin America and the Caribbean, this concept is referred to as “social pricing”.
This study presents some methodologies for estimating the social price of carbon, describes how this can be included in the evaluation processes of public investment projects, taking the case of Chile as an example, and proposes the application of one of the methodologies analysed in public investment projects in the countries of the region, within the framework of national public investment systems.
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