Creating new commodities: carbon trading and ecosystem services markets

Carbon, biodiversity and ecosystem services markets create new commodities that form the basis
for speculative trading. This seminar looks at how carbon is traded, using it as an example that lifts
the lid on the obscure and jargon-filled world of derivatives markets. It also looks at who the key
beneficiaries are in these markets, why carbon markets are failing to drive clean investment, and
why IFIs continue to experiment in carbon markets anyway. It will also look at plans and pilot
schemes for markets in soil carbon, avoided deforestation, biodiversity and ecosystem services.

Core reading
FERN (2010) Designed to fail? The concepts, practices and controversies behind carbon trading esp.

Robertson, M (2009) Five Hidden Challenges to Ecosystem Markets, Ecosystem Marketplace 4 January

Background reading
Corbera, E., K. Brown, et al. (2007). “The equality and legitimacy of markets for ecosystem services.”
Development and Change 38(4): 587-613.

Costanza, R., R. d’Arge, et al. (1997). “The value of the world’s ecosystem services and natural
capital.” Nature 387(6630): 253-260

Daily, G. C., T. Söderqvist, et al. (2000). “The Value of Nature and the Nature of Value.” Science 289:

Gilbertson, T. and Reyes, O. (2009) Carbon Trading: how it works and why it fails

Gómez-Baggethun, E., R. De Groot, et al. (2010). “The history of ecosystem services in economic
theory and practice: from early notions to markets and payment schemes.” Ecological Economics 69:

Mandel, J. T., C. J. Donlan, et al. (2010). “A derivative approach to endangered species conservation.”
Frontiers in Ecology and the Environment 8(1): 44-49

Palmer, M. A. and S. Filoso (2009). “Restoration of Ecosystem Services for Environmental Markets.”
Science 325(31): 575-576,

Pryke, M. (2007). “Geomoney: An option on frost, going long on clouds.” Geoforum 38(3): 576-588.

Reyes, O. (2012) “What goes up must come down – Carbon trading, industrial subsidies and capital market governance”, What Next Volume III Climate, Development and Equity, no. 61 | september 2012

Schapiro, M (2010) “Conning the Climate: Inside the Carbon-Trading Shell Game” Harpers Magazine

Sullivan, S. (2011). Banking Nature? The financialization of environmental conservation, Open
Anthropology Cooperative Press

Oscar Reyes, Institute for Policy Studies
Audio | PowerPoint

Morgan Robertson, University of Kentucky
Audio | PowerPoint