The Clean Development Mechanism (CDM) of the Kyoto Protocol
is designed to allow the industrialised countries to earn credits
by investing in greenhouse gas (GHG) emission reduction projects in developing countries, which contribute to sustainable development in the host countries. This research empirically investigates the long-run impacts of CDM projects on CO2 emissions for 34 CDM host countries over 1990-2007. By allowing for considerable heterogeneity across countries, this research provides strong evidence in support of a significant
effect of CDM projects on CO2 emission reductions in the host
countries. It offers ample recommendation for improving CDM development and serves to encourage the developing countries to strengthen their national capacity to effectively access the CDM for their sustainable development objectives.