What are the advantages of an economy-wide approach to international carbon transfers over project-based mechanisms to transfer international carbon credits (such as the Kyoto Protocol CDM and JI or project-based bilateral agreements)?

Economy-wide approaches set a national emissions cap, hence achieving high integrity emissions reductions. Project-based approaches set a baseline at the project level. Additionality is difficult and often impossible to assure this level and domestic leakage is often a concern. Therefore, national emissions could be growing, even if the project producing mitigation units is delivering emissions reductions relative to business as usual.  National level baselines and monitoring avoid domestic leakage and, with an ambitious NDC well below BAU, assures additionality.  In conclusion, project-based approaches cannot guarantee that emissions reductions will take place at the national level, while economy-wide approaches like CAT agreements can. Another advantage of economy-wide approaches are lower transaction costs, as it is not necessary to verify emission reductions of every single project and programm (Schwartzman et al., 2021).