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Worst fears on “green assets” markets justified

An exchange for “environmental assets” opened in Brazil (called BVRio) is reportedly the latest experiment in a worrying trend to monetize and marketize natural resources as a response to the sustainability crisis facing our planet. Environmental conservation and gender advocates contend that it is precisely the application of a model centered on growth, efficiency and market fundamentalism to maximize prosperity for all what has led to the current ecological crisis predicament.

 

A recently-published primer on financial regulation, human rights and sustainability cautions that solutions that bridge finance, human rights and sustainable development will need to challenge the logic and mechanisms that are destroying the planet. One of the lenses it proposes to assess financial regulations is to determine whether these regulations encourage financial agents to channel real resources to real activities, or they simply expand the “chips” for owners of financial capital to bet with. Sustainable outcomes cannot be expected to magically emerge from a process of financialization of assets and expansion of markets on them, when financial markets have historically proved to be so short-sighted.

Indeed, the available facts reveal not such magic is at play. As this article on Brazil’s new exchange reports, “the financial logic of buying quotas is compelling. It can cost up to R$ 15,000 to replant a hectare of land in the Amazon, not including the opportunity cost from lost production. A quota costs a lot less for much less hassle.”

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June 2017
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