creator Li, Jing advisor Sabbaghi, Navid The Clean Development Mechanism (CDM) is a mechanism de ned in the Ky- oto protocol that incentivizes parties to the protocol to fund sustainable development projects in countries that are not party to the protocol. In the rst chapter of this paper, I introduce the CDM and how the nancing mechanism works. In the second chapter, I analyze a target contract nancing structure for di erent CDM projects in order to see under what conditions the nancing structure is e cient and to explore the contract's allocation of pro t among the rms. In the two broad categories of CDM projects I consider, I nd the optimal investment decision for the investor and for the overall system. I also analyze how the residual value of technology would a ect the nancing, target contract's e ciency, and allocation of pro t. In the third chapter, I conduct empirical analysis on the actual CDM outputs, Certi ed Emission Reduction units (CERs), for a sample of wind CDM projects in China. I nd that CDM projects greatly under perform relative to the promises they make. Based on this under-performing records, in the fourth chapter, I analyze the economic bene ts investors could gain if they were able to directly fund a portfolio of CDM projects and obtain returns from the anticipated CER issuances and underlying energy generated from the portfolio of CDM projects. I consider a variety of funding constraints that the CDM fund/portfolio manager (CDM-PM) may face and determine their economic performance against actual CDM project data for wind CDM projects in China. Submitted by Liana Khananashvili (khananashvili@iit.edu) on 2013-12-06T21:20:35Z No. of bitstreams: 2 Jing Li-Essays in Environmental Finance.pdf: 4053229 bytes, checksum: a6cb074144fc51d70f7e7e8668d90124 (MD5) Title Page.pdf: 282010 bytes, checksum: 1dbb99abf7b90ee687bf1cb1969f478f (MD5) Made available in DSpace on 2013-12-06T21:20:35Z (GMT). No. of bitstreams: 2 Jing Li-Essays in Environmental Finance.pdf: 4053229 bytes, checksum: a6cb074144fc51d70f7e7e8668d90124 (MD5) Title Page.pdf: 282010 bytes, checksum: 1dbb99abf7b90ee687bf1cb1969f478f (MD5) Previous issue date: 2013-07 PH.D in Management Science, July 2013 2013 2013-07 http://hdl.handle.net/10560/3176 en Dissertation born digital application/pdf In Copyright http://rightsstatements.org/page/InC/1.0/ Restricted Access SSB / Stuart School of Business Illinois Institute of Technology Affiliated department