Jinshan Zhu from Cornell University, US, performed an in-depth analysis of more than 2,700 CDM projects worldwide. He found that the most decisive factors when determining the performances of CDM host countries are their domestic economic and investment conditions, not their CDM governance.

"People often think that some countries' success in CDM is due to their excellent policy, and then argue that as long as such a policy is installed in other countries, it will do the same job," Zhu told environmentalresearchweb. "But we need to bear in mind that the background economic conditions are the most important factors. In this context, my research suggests that we should not exaggerate the importance of domestic policy on CDM."

According to Zhu, when countries are compared on annual carbon-credits expected per unit of land area, large nations such as China, India and Brazil are no longer leading players. The ranking of annual carbon-credits per unit of area shows that the top five countries are Qatar, the Republic of Korea, Singapore, Israel and El Salvador, followed by China and India. Brazil is in the middle range of CDM host countries, behind not only most Latin American countries, but also several African countries.

As well as land area, Zhu also looked at host countries' economic and investment conditions, which can be measured by foreign direct investment, gross domestic product (GDP) per capita, and GDP per capita growth rate. He found these factors, together with land area, to be the most decisive aspects influencing CDM performance. When these factors are excluded, the ranking of the host countries' performances in promoting CDM changes even more dramatically.

"China, India and Brazil are impressive CDM host countries in terms of their remarkable market shares, total number of projects registered and the total annual carbon credits," said Zhu. "But my research has shown that these countries' successes are mainly attributable to their economic and investment conditions and vast land areas."

Zhu also found that several African countries, including Morocco, Ethiopia and Uganda, have good positions in the ranking when the influence of land area and economic and investment conditions is excluded. This implies that these countries are very effective at promoting CDM, despite their less advantageous economic climate and moderate size.

Zhu points out that, with a market-oriented tool such as CDM, there is usually a paradox between efficiency and fairness. "Policy makers should respect CDM as a tool that tends to reduce greenhouse gases efficiently, rather than a tool to redistribute welfare," said Zhu. "Market-based greenhouse-gas reduction is an evolvable and promising tool. If policymakers cannot help in its improvement, it should be left undisturbed."

Zhu is concerned about the European Commission's policy not to purchase carbon credits from advanced developing countries after 2012. "If we refer to the common sense highlighted in my research, we can expect that EU industrial sectors [will] have to pay higher prices for the same amount of carbon credits, or get less carbon credits at the same price," said Zhu. "We will end up spending more financial resources for less greenhouse-gas reduction."