ABSTRACT
This chapter considers the potential value and limitations of the trend towards providing credits for human activities that create environmental goods and services. 1 Since the 1970s, the ‘market’ has been increasingly advocated as a panacea for all environmental problems. Various kinds of exchange mechanisms have been developed and applied to address a range of development impacts, such as air and water pollution, carbon emissions, allowable building envelopes, and habitat destruction. More recently, carbon trading has been widely promoted as the solution to global warming. Carbon trading, in effect, means an industry can emit carbon if it reduces carbon emissions elsewhere. Carbon becomes a currency. Artificial property rights are created in environmental ‘goods’ (eg carbon sequestration) or ‘bads’ (eg pollution emissions). In order to trade the goods and services of nature, they must be treated as separate from their natural context. By attaching a value to these rights, they become commodities and can be sold or traded. Exchange mechanisms create a ‘license to pollute’, or a right to use a certain amount of water or air up to a limit or ‘cap’. In this way, a market is created without the actual ownership of the land, air or water changing hands. In other words, industries can buy, or receive allocations to, the right to continue to generate (or generate more) environmental damage.
