Tigahs’s Recent Comments

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  CDM Projects

  CDM projects have largely been a fraud thus far, with HFC-23 (industrial gas) destruction comprising of almost 60% of credits in the pipeline (new projects like this are not allowed to go online). HFC-23 is 11,700 times more potent than CO2, so the conversion rate is unreal when dealing w/ carbon credits. It would only cost 100 million euros to purchase scrubbers for all of the refrigerant-related industries. Instead those industries were able to buy the relative inexpensive scrubbers themselves and then generate carbon credits--up to 4.6 billion euros worth!!!

  So basically the social cost incurred is 4.5 billion euros. It is a wealth transfer to those industries.

  A lot of policy formulation and implementation problems to tweak out before cap-and-trade systems can function as they are theoretically supposed to. Europe's emissions actually increased more rapidly than the US's since 2000. Does the US have a cap-and-trade system? no.

  I support one, but think that the policy formation and implementation processes must account for problems extant in Kyoto & the EU ETS. On On the oddity of privatizing nature posted 1 year, 8 months ago 31 Responses

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  well put naturescene

  naturescene, I couldn't have said it better myself.

  and a lot of World Band and/or CDM projects basically equate to eco-colonialism. The social actors include not just the World Bank, but private-sector project developers, NGO project verifiers and certifiers, & local public authorities.

  For example, the District Sao Jose do Buriti, Brazil has transformed dramatically from a World Bank funded eucalyptus monoculture plantation.

  The eucalyptus monoculture has drastically altered the land, absorbing the water sources, which creates water scarcity. Fisherman can't fish, the medicinal plants traditionally used by the townspeople don't grow, and the lack of a water supply hinders the area's small and micro-industries, all of which are substantial negative externalities.

  The buyer was a BP refinery in Scotland who wanted to 'offset' emissions that were not 'cost effective' to reduce. So they exported their problem to a nation where production inputs of balancing their CO2 emissions would be cheaper.

  This BS to me since CO2 quantification of forestry projects is sketchy and monocultures have so many negative externalities.

  The project developer was Plantar (for-profit). The Forest Stewardship Council (FSC) certified the monoculture project with its "green label." And of course the local authorities were in bed w/ the project. Even the community was 'bought off' to some extent.

  Plantar and to some extent FSC, addressed the communities complaints and provided most of them with minimum-wage jobs since the land was no longer viable. This is obviously an example of eco-colonialism, but it also reflects the power of bargaining externalities central to Coase's Theorem.

  Although not everyone was 'bought off', a documentary exposed the World Bank's actions:
  "The Carbon Connection" Documentary hosted by Carbon Trade Watch, it is also on google video.On On the oddity of privatizing nature posted 1 year, 8 months ago 31 Responses

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  Economic Theory and Ecosystem Services

  In 1968 Gary Hardin published, "The Tragedy of the Commons," which suggested that societal exploitation of natural resources is the consequence of the inherent conflict between individual self-interest and usage of common--unrestricted areas and resources. Therefore, it logically follows that the solution to the "Tragedy of the Commons" is simply to abolish the commons. This absolutist and unorthodox suggestion dovetails nicely with Ronald Coase's piece, "The Problem of Social Cost," published in 1960. The core supposition of Coase's Theory is that bargaining tradable externalities will result in economic allocative efficiency, but only when property rights are well defined for the involved parties. Canadian economist John Dales combined Hardin's conclusions with Coase's Theory. In 1968 he published, "Pollution, Property, and Prices." He suggested the establishment of a market-based quota system on regulating water pollution. The system would be imposed on firm's dumping into each primary water source. A unit of waste would be allocated to the relevant firms up to the quota amount. Firms dumping less waste into the waterway could sell their unused unit to firms exceeding their quota.  John Dales' essay posited the notion of "pollution rights" that are "transferable property rights;" a concept that pervades the function and language used in contemporary carbon markets.  Hardin's thesis, the Coase Theorem, and Dale's synthesis of the two represent the conceptual genesis of carbon trading.

  Mainstream Economic theory indicates that carbon-intense products are currently under-priced. That is because only the private costs are accounted for via market mechanisms. Emission of carbon dioxide (CO2) contributes to global warming--a social cost, hence the negative externality associated with CO2 consumption.  The government or similar authority must internalize this negative externality by adjusting the cost of carbon-intense goods and services to account for the social costs associated with its consumption. However, the social and political impetus for government induced artificial price inflation of carbon-intense goods is occurring at a time when global petroleum production is peaking. After peak, the historic patterns that determine petroleum price and demand cycles will cease.  Direct artificial price inflation of carbon products via public policy will inevitably clash with continuously rising oil prices. Public disapproval over unprecedented prices at the pump reduces the political feasibility of a carbon tax. A cap-and-trade system may still, in effect, pass the added costs to the consumer. However, it is more indirect and less transparent than a carbon tax and therefore is more politically feasible. This may explain why cap-and-trade systems represent the dominant policy mechanism for reducing greenhouse gas emissions around the world. Cap-and-trade policies reflect the tenets of neo-Keynesianism, whereby public policy aims to utilize market mechanisms to fulfill its objectives. On On the oddity of privatizing nature posted 1 year, 8 months ago 31 Responses

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  there is an inherent conflict

  there is an inherent conflict when private financiers purchase huge plots of land/forests because sometimes people still live on those forests and still utilize its ecosystem services, treating them as common pool resources.

  Ecosystem markets are composed of ethical participants with good intentions, but as with most markets, there are some bad apples out there for sure. Market transparency will expose them.

  But one shouldn't be so simplistic with the absolutist approach that all market mechanisms aimed at environmental protection are 'bad'. On On the oddity of privatizing nature posted 1 year, 8 months ago 31 Responses

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  Ecosystem Marketplace

  I actually work for a non-profit that specializes in ecosystem services and payment schemes, called Ecosystem Marketplace We generally focus on increasing transparency in this emerging market.

  Of course we provide a good bit amount of information on carbon markets, particularly non-compliance/ voluntary carbon offsets, but we also cover the role of private finance and public policy regarding watershed protection, biodiversity habitats, species banking, wetlands protections, etc.

  It does seem odd, the idea of private equity sweeping in to protect the ecosystems. Environmental degradation is often a byproduct--negative externality--of ventures intended to accrue private equity. However, as of the present, people worldwide--including corporations are starting to realize that not only do ecosystem services possess an "existence value" (something more intrinsic), but also that the the environment produces services that have real economic value. Alterations in land-use can affect watersheds that communities and businesses rely on to operate etc.

  Insurance corporations are especially realizing the economic value of ecosystem services as they would among the hardest hit (financially) by the environmental disasters global warming may have in store for us.
  On On the oddity of privatizing nature posted 1 year, 8 months ago 31 Responses