Company’s Competitiveness Enhancement for Thai Agribusiness through the Clean Development Mechanism (CDM)

Amornwan Resanond, Thanwa Jittsanguan, Damrong Sriphraram

Abstract


Ratification to the Kyoto Protocol allows Thailand to voluntarily participate in the Clean Development Mechanism (CDM). CDM not only promotes environmental integrity but also offers business sustainability, which will be then able to enhance company’s competiveness. Due to these enthusiastic impressions, number of CDM registered projects in Thailand has been increased from 5 to 40 projects between 2005 and 2010, respectively. Several business sectors in Thailand have been moving their position toward to CDM including agribusiness sectors namely sugar, tapioca, rice, agrofuel, livestock and forestry. This study carries out an in-depth analysis on the correlations between CDM mechanism and agribusinesses in Thailand through the competitiveness indicator with a view to affirm that the level of competitiveness in Thailand agribusinesses can be enhanced through the CDM scheme. Productivity improvements in term of technology and project financial before and after the CDM application are served as competiveness indicators. The study concludes that CDM offers opportunity for company to move toward a better technology with a better operation performance and greenhouse gas reduction. The improvement of productivity level is found through an anticipated revenue stream from carbon credits which delivered project’s rate of return well above company’s hurdle rate of approximately 10-16% for 4 types of agribusinesses i.e. palm oil, rice mill, ethanol and tapioca. Despite abovementioned benefits,, CDM still faces a lot of challenges including a requirement on a substantial amount of investment which requires for starting the CDM process, risk of local and international approvals, deliverable risk, and uncertainty on CDM processing time and the future of CDM after the first commitment period, 2012. These challenges, however, can be overcome by well-disciplined preparation and better understanding on CDM process and requirements.

Full Text: PDF DOI: 10.5539/jsd.v4n2p80

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This work is licensed under a Creative Commons Attribution 3.0 License.

Journal of Sustainable Development   ISSN 1913-9063 (Print)   ISSN 1913-9071 (Online)

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