Incluye bibliografía

Introduction -- 1. Investment criteria -- 2. Costs and portfolio choice -- 3. Conclusions -- References -- Figures in text -- Tables in tex -- Appendix -- Tables in appendix

This paper was prepared at the request of the Scientific and Technical Advisory Panel (STAP) of the Global Environment Facility (GEF). It addresses such issues as the costs of carbon emissions (or their reduction) and their implications for project appraisal; the appropriate discount rate to be used in comparing costs, bearing in mind intergenerational concerns as well as cost-effectiveness; cost estimates of the benefits of innovation, particularly the contribution of investment towards reducing the cost of future investments when cost curves, as a function of investment, are steep; the role of projects where national economic benefits outweigh national costs relative to projects which are not cost-effective from a national standpoint but provide global environmental benefits; and the possibilities of reducing transaction costs in certain GEF projects with economic potential.