Has the Clean Development Mechanism assisted sustainable development?

One of the dual objectives of the Clean Development Mechanism (CDM) of the Kyoto Protocol is to assist host countries in achieving sustainable development. With various CDM indicators for 58 CDM host countries over the period 2005‐2010, this paper empirically assesses whether CDM project development fulfils its sustainable development objective. Using a unique dynamic panel data method based on the long‐differenced model, this research provides convincing evidence that CDM projects contribute to sustainable development in host countries. It sheds light on the role of the CDM in the process of global sustainability with clear policy implications for developing countries and those embracing market instruments.