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    111 | The False Dichotomy Between Reductions and Removals (Rerun)

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    110| Ecological Economics, Systems Thinking, and the Limits to Growth

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    108 | The Washington Post’s Head Scratcher of a Carbon Story

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    107 | Francis Bacon and the Prehistory of Climate Finance. Second in an intermittent series on the Untold Story of the Voluntary Carbon Market

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    106 | Steve Discusses the "Tribes of the Climate Realm" on the Smarter Markets Podcast

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    105 | The Role of Carbon Credits in Conservation: A Case Study from Guatemala

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    104 Transition Finance: How Carbon Markets REALLY Work, with David Antonioli

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    103 | Jen Jenkins on Purists, Pragmatists, and Science-Based Targets

46| Restoration Economy, Part Two: The Billion-Dollar Foot

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Transcript

It’s an article of faith among some on the left that markets and capitalism are the roots of all evil, while some on the right see pure, free markets as the invisible hand of God, and regulation as the work of the Devil.

Most economists will tell you they’re both wrong, because there’s no such thing as either a pure free market or a marketless society. We need markets to get things done, and we need governance to keep markets honest. 

That’s especially true in environmental markets, which almost always exist because of laws that require people to clean up their messes or reduce their pollution.

To slow climate change, for example, we have to put a cap on greenhouse-gas emissions, but how do we meet that cap?

There are basically two ways.

In command-and-control, a regulator writes up detailed, step-by-step prescriptions that have to be followed to the letter.

In cap-and-trade, which is a market-based mechanism, emitters find their own way of meeting the cap, and they’re allowed to sell emission-reductions to others if they reduce more than the law requires. On the other hand, they also have to buy emission-reductions if they fail to meet their obligations.

If you’re a regular listener, you know that carbon is just one of many environmental markets that are helping to fuel a $25 billion per year restoration economy, and that’s just in the United States, as companies and municipalities rush to restore degraded rivers, forests, and other ecosystems on which our entire economy depends.

Environmental markets, however, don’t replace regulation. What they do is provide flexibility in meeting regulatory requirements.

They work, and they work well, but only if properly regulated.

Unfortunately, regulators have seen their budgets frozen or even cut — ostensibly to reduce costs. The result, ironically, isn’t just less protection, but higher costs of compliance.

Today’s Guests:

Todd BenDor, University of North Carolina Chapel Hill

Jason Brenner, RiverBank

Murray Starkel, Ecological Service Partners

Jud Hill, Ecological Service Partners

Dave Groves, Earth Partners

About the author

Steve Zwick

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