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This article analyzes the constraints on innovating public services in the context of the clean development mechanism (CDM). We use two methodological procedures: First, the public-private innovation networks in services (ServPPIN) concept is used to identify the stakeholders involved in the CDM projects in São Paulo, Brazil (Bandeirantes and São João landfills); the second procedure is carried out by adapting the social carbon methodology (SCM) indicators. SCM is a specific instrument used to evaluate the social and environmental co-benefits of carbon market projects. The proposed indicators were presented to and discussed with the stakeholders. The use of evaluation indicators facilitates the recognition that opportunities for service innovation are related to the establishment of new institutional and organizational arrangements. These new arrangements involve municipal governments, concession-holders, and the communities surrounding the landfills. In order to attain positive results they have to be able to work together, thus making the best use of their combined potentials.JEL Codes: O33, Q52, Q55, Q56