A comparative analysis of the 'development dividend' of Clean Development Mechanism projects in six host countries

Reform of the Clean Development Mechanism (CDM) is a key issue in advancing the objectives of the Kyoto Protocol. The CDM was created with the mutual objectives of providing cost-effective abatement opportunities for industrialized countries and to advance sustainable development in developing countries. Current literature, however, suggests that the CDM is failing to deliver on its promise of a 'development dividend'. This article compares and contrasts different host-country approval processes and investigates how this is reflected in CDM project quality. The implementation of the 'development dividend' in six countries (China, India, Brazil, Peru, Malaysia and South Africa) is analysed, using the Project Design Documents of 122 projects. Investment risks in these host countries are compared to the quality and quantity of projects in these countries. Potential drivers and barriers to achieving a higher 'development dividend' are discussed and best-practice approaches to project appraisal identified. The paper concludes that the host countries' frameworks for CDM project approval fall short of achieving a 'development dividend', with the exception of Peru. Peru takes a distinct approach involving stakeholder involvement and on-site visits to confirm the projects' contribution to sustainable development, instead of a desk-based assessment.