The Clean Development Mechanism: too flexible to produce sustainable development benefits?

The Clean Development Mechanism (CDM) of the Kyoto Protocol has a dual objective: to encourage low-cost emission reduction and to promote sustainable development in the host countries of CDM projects. The CDM has by and large delivered on the first objective but arguably not on the second. This paper assesses quantitatively the form and prevalence of co-benefits in CDM projects. Adopting a broad definition of sustainable development, the project design documents of 409 projects (10% of the October 2008 project pipeline) were searched for keyword indicators of contributions to economic growth, physical, social and natural capital. Economic growth co-benefits, in the form of employment, constitute the main project co-benefit, with 82% of projects claiming to contribute to employment. Under a stricter sustainable development definition, projects contribute principally to social capital, primarily training (67%), with physical and natural capital gains less prominent. End-of-pipe projects are found to have lower co-benefits than renewable energy or forestry projects in particular. Contrary to common belief, small-scale projects do not appear to provide higher co-benefits than large-scale projects.