Six hydroelectricity projects registered under the Kyoto Protocol Clean Development Mechanism (CDM), three each in Brazil and Peru, are reviewed to assess and contrast Peru's and Brazil's differing regulatory approaches to assessing the sustainable development (SD) benefits of CDM projects to social development. The Brazilian regulators rely exclusively on documents addressing a finite set of issues, whereas the corresponding Peruvian regulators visit the project site to engage in an ad hoc assessment of SD needs. Brazil's approach encourages foreign investment by providing some certainty of costs and prospects, yet the projects reviewed provided only limited SD benefits for social development. The Peruvian projects included significant and diverse social benefits for the local community. In order to achieve business confidence and social development benefits in the short to medium term, a hybrid of these approaches is recommended. However, successful implementation of this approach will require enhanced domestic non-governmental organization capacity, including additional funding. Ultimately, it appears that the solution lies in multi-stakeholder dialogue among mature regulators, civil society actors, local government and local community actors, and project developers.
