The Clean Development Mechanism (CDM) is a mechanism under the Kyoto Protocol that aims to reduce greenhouse gas emissions and promote sustainable development. Let`s dissect each option to better understand the implications of CDM:

Option 1 states that industrial countries receive carbon credits by funding carbon-saving projects in another relatively affluent nation. This statement is incorrect as the CDM specifically focuses on the involvement of developed countries in investing in carbon reduction projects in developing countries, not other affluent nations.

Option 2 suggests that industrial countries reduce their carbon emissions by using environmentally friendly technology in production. While this is a good practice for reducing emissions, it does not directly relate to the mechanism of the CDM. The CDM is primarily focused on international cooperation and investment between developed and developing countries.

Option 3 correctly states that developed countries invest in carbon reduction projects in developing countries and receive carbon credits in return. This is the crux of the CDM. Developed countries fund sustainable projects in developing nations, which helps these countries reduce their emissions. In return, the developed countries receive certified emission reduction credits (carbon credits).

Option 4 suggests that developed nations purchase carbon credits from other nations. While this may happen in specific scenarios, it does not fully capture the essence of the CDM. The CDM is