The
Environmental Markets are the
financial markets for emissions trading. Emissions trading is also known as cap
and trade. It is a technique used for restricting the level of pollutions caused
by commercial organizationsby offering them economic incentives for efficiency
in emissions and allocating a cost for inefficiency.
Carbon Trading is a relatively new concept that is in its formulation
stage as many countries are proposing their own schemes.
Several financial exchanges are already in place for increasing the liquidity
demand in the global EnvironmentalMarkets. At present, the largest emissions trading scheme in the world is
the European Union Environmental Trading Scheme.
Another
importanttermsthat is prevalent in this market is in the form of Carbon Farming Initiative. It creates a
trading relation between carbon polluters and farms, forest developers and
landowners. In this case, the carbon polluters are those who are committed
towards reducing their carbon emissions, while the farmers and others are the
ones that earn carbon credits. Credits can be earned either by storing carbon in
the setting or minimizingcarbon emission during production.
At
this juncture, you would want to know what carbon credits mean. Carbon credits stand
for reductionin atmosphericgreenhouse gasesthroughthe following two processes. The
first is by increasing the level of carbonaccumulated in trees or soil. A good
example is by reducing tillage in a warmso as to increase carbon or by growing forests.
The secondprocess is to reduce or avoid emissions. This can be achieved by capturingand
destroying methane being emitted from livestock manure or landfills.
With
this knowledge in place, you would now be able to better understand what Environmental Markets mean. They are a
controlled exchange of ecosystemservices and goods between sellers and buyers. The
sellers have the suppliers, and they act as the owners of property. The take
steps for the implementation of conservation practices for improving ecosystem
services. as an example, the planting of a riparian buffer enables landowners
to generate reductions in nutrientsfor creating credits. They can then sell
these credits to buyers from the water quality market.
It
is the buyers that provide the capital and need for driving Carbon Trading markets. As an example,
the water quality markets would be driven by the need for reduction of nitrogen
and other nutrients in the watershed. The organizations and peopleasking for
these reductionswould be complying with rulings such as the Clean Water Act.
This further leads to the creation of future rules.
Ecosystem
markets, Environmental Markets and Payments
for Ecosystem Services are different termsused for referring to the complete
set of economic tools used for rewardingconserving ecosystem services. in
addition, all these terms are also used for referring particular division of
these tools.
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