Private Governance in Developing Countries: Drivers of Voluntary Carbon Offset Programs

In the Paris Agreement era of climate governance, private market-based initiatives are expected to play a catalytic role in achieving global commitments. However, the literature has been largely silent on the political causes of the variable and often limited uptake of such initiatives in the Global South. This article uses original project-level data to investigate the participation in voluntary carbon offset (VCO) programs across developing countries. We argue that, paradoxically, access to formal international institutions and linkages with domestic priorities are key factors for participation in voluntary carbon markets, reducing asymmetries in information, capacity, and interest in developing contexts. Our statistical analysis finds that institutions such as the Clean Development Mechanism and targeted foreign aid, as well as domestic concerns such as climate vulnerability and advancing renewable energy, shape in important ways the variable engagement in VCO projects. Our analysis also suggests that the design of private regulations can be fine-tuned to better capture synergies between local concerns and transnational climate action.