Market Design for the Environment / Estelle Cantillon, Aurélie Slechten.

Format:

Book

Author/Creator:

Cantillon, Estelle.

Contributor:

National Bureau of Economic Research.

Slechten, Aurélie.

Series:

Working Paper Series (National Bureau of Economic Research) no. w31987.

NBER working paper series no. w31987

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2023.

Summary:

The main argument in favor of markets in environmental contexts is the same as in other contexts: their ability to promote efficient allocations and production. But environmental problems bring their own challenges: their underlying bio-physical processes - and the technologies to monitor them - constrain what is feasible or even desirable. This chapter illustrates the main design dimensions in environmental markets, the trade-offs involved and their impact on performance, through the lens of a regulated market for pollution rights (the EU emissions trading scheme) and a voluntary market for the provision of environmental services (the global market for carbon credits). While both markets eventually contribute to climate change mitigation, their organisation as a "pollution market", for the former, and as a "provision market", for second, means that different design considerations take precedence. Both markets also face challenges: volatile prices in the EU emissions scheme and low trust for voluntary carbon markets. We discuss how alternative design options could address those.

Notes:

Print version record

December 2023.