Market-based Mechanisms for Development

I got to thinking about the CDM and market-based mechanisms in general. Now I am not an economist and I will admit I know just enough to make myself completely wrong, but economic theory tells us when we don't know a price on something, a market should develop a 'fair' price. Or at least establish what the users feel the product is worth. 

And I began to wonder what this said about the CDM and Sustainable Development. We know that there is a market and willingness-to-pay to meet regulations...because there is no choice. But what exactly did the framers of the Kyoto Protocol flexible mechanisms expect the market to value sustainable development?

So far, it has been a market failure. The development dividend has been next to zero. There are a couple of projects which possess development benefits, but they are few and far between, especially here in India. The problem is, in my opinion, is that there isn't a willingness-to-pay within those industries that are currently regulated. Some of this is because of the reasons I posted yesterday, no customer accountability, but I think the greater issue is that these industries don't feel it is in their mandate to promote development. I think even more the reason is that they have no idea how to promote sustainable development.

It just reiterates the words of Chandran Nair. Maybe development agencies should offer their services to these industries? 

Just a thought.