Tuesday, December 11, 2007

Voluntary carbon offsets

Buying carbon offsets is a trend among the environmentally conscious rich. A bad trend as it (i) does not have a serious impact on carbon reduction and (ii) creates a false sense of achievement.
Much better is a clear market signals on the cost of not curbing carbon, such as a auctioned carbon rights under cap and trade system. This according to a contribution on the Globalisation and Environment blog with reference to an article initially posted on the Becker-Posner blog.

In my opinion this is a case of one market leading to another. The international financial system was also not created in one masterstroke, but developed gradually with voluntary exchange leading the way. At some point more structure is needed and a national and ultimately international system developed.

It is a normal development - there is a demand for carbon offset, there is no global cap and trade system yet or carbon taxes do not capture specific individuals' willingness to pay, with the result that voluntary schemes develop.

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