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Politicians the world over are coming to realise that climate change is an imminent problem facing humanity. These challenges bring together concerns for the relationship of humans to nature, the responsibility of the richer nations to the poorer, the effect of local activities on global conditions and the responsibility of current generations to future ones. Liverman (2009) identifies three key narratives that frame international response to these issues – the first is the assertion that dangerous climate change must be avoided, secondly that the responsibility for climate change is common but differentiated and finally that the market is the best means to deal with this imminent crisis. These narratives are given great discursive power in conventions addressing this issue and have an enormous influence in shaping political strategies. For this blog I aim to address some of the problems involved in the use of the market as a mechanism to deal with climate change.

The dominant ways of understanding climate change, outlined above, have removed this issue from the wider contestation of social and environmental relations. These debates have abstracted processes, such as global warming and CO2 emissions, from the unequal social and environmental relations on which neo-liberal globalisation is grounded, even going so far as to propose the market as a mechanism to deal with these induced problems. The unequal relations produced through neo-liberal globalization have long been questioned by the counter globalisation movement, which demonstrates that it is possible to make power relations that underpin neo-liberal globalisation localisable and contestable (Featherstone, 2013). Like neo-liberal globalisation climate change has come to be seen as a consensual, post-political issue. There is a need to challenge this post political view of dealing with climate change that tends to ignore the injustices that underlay the production and impacts of climate change.

Carbon trading (a market mechanism) is a method induced by the Kyoto Protocol to deal with and mitigate the effects of climate change (Bond, 2012). This method been described as a form of neo-colonialism whereby rich countries are able to maintain their consumption patterns by paying a minimal sum to poorer countries to invest in activities such as growing trees, thus ‘offsetting’ or making up for their emissions. At the same time these poorer countries are unable to develop their own infrastructure as they are not able to subsidise their own emissions.

As this market solution to mitigating climate change was proposed by a select few powerful individuals and states it is no wonder their interests have been better served and that only very modest reductions in carbon have been proposed and achieved. Loopholes and manipulations continue to pop up in this method through which some countries are able to accumulate vast amounts of carbon credits, thus allowing them to make a profit from them. In turn those who are not willing to reduce their emissions are able to buy these credits and feel justified to continue emitting as they please. Thus the large corporations who are generally the highest emitters are able to buy their way out of trouble. Another way of dealing with this is for these companies to simply account for these costs by upping their prices, thus ultimately transferring their responsibility onto the consumer without needing to change their practices or policies at all.

This market mechanism narrative can be seen to simply have created a new commodity to be traded that continues to create and reinforce unequal relationships of power. There is even question on the scale of how much emissions are being reduced, if any at all. All in all, I see this market driven response to the challenge of climate change as an ineffective mechanism that generates more problems than it answers. For me a simple question to be answered is: should our focus be on people or the market?

 

References

Bond, P. 2012. Emissions Trading, New Enclosures and Eco-Social Contestation. Antipode, 44(3): 684-701.

Liverman, D. 2009. Conventions of climate change: constructions of danger and the dispossession of the atmosphere. Journal of Historical Geography, 35: 279-296.

Featherstone, D. 2013. The contested politics of climate change and the crisis of neoliberalism. ACME. 12(1): 44-64

3 Responses to “Dealing with Climate Change – The Market as a Mechanism”

  1. Dean Harrison

    Fantastic topic and very well written blog entry

    For centuries it has been debated by economists and philosophers whether there should be any intervention in the market. The carbon trading mechanism/instrument is one such example of a market intervention in recent times. It could be argued that just by intervening in the market, financial inequality will accrue.

    One of the biggest loopholes I see with carbon trading is the problem of market equity. In a competitive market, a company cannot transfer the cost of carbon credits to consumers as their products will become more expensive than competitors and they will lose their market share. However, with current technologies it is generally cheaper to produce In a less environmentally friendly manner. This brings about an important cost trade-off. It might be cheaper for the company to purchase carbon credits and produce with high emissions, making their cost of production cheaper and therefore they can seek their products cheaper eliminating smaller companies from the market. These high emitting successful corporations would then earn more revenue that can be used to purchase more credits and the cycle continues thus straying the carbon trading mechanism from its intended purpose.

    While I don’t think market intervention is a good strategy, I do believe that the market has a very important place in climate change mitigation. Look at the concept of “going green”. This consumer preference has developed an entirely new and successful niche market. This market is beneficial to the economy as while as climate change mitigation efforts. Are the producers and suppliers in this market selling their products and services with the primary aim of mitigating climate change? While this may be the case for an insignificant minority, this market is based on supply and demand just like any other market where maximizing profit is the ultimate goal.

    What does become important in the “going green” market and other markets that may be detrimental to climate change is consumer preference. Otis consumer preference (demand) that ultimately results in the markets existence. Therefore climate change strategies should focus on people and their perceptions/preferences. The relative markets will naturally adjust to their new equilibriums.

    In summary, I think the focus should be on people. However, the market is an important interdependent element that should not be over looked. To understand consumer preference (marketing – sell climate change mitigation) and not to add market intervention instruments.

  2. Gemma Bluff

    Good topic to tackle Greg. I love your question “should our focus be on people or the market?”, and I believe it to be of much importance with regards to climate change. Too often the little guy is pushed aside and overridden by big corporations. Modern-day capitalism has made this all too easy for the man at the top. I think of the idea of putting a price on water – a non-commodity that should be free, and freely accessible to all. And it makes me angry when I think that only a few rich individuals are controlling so much, and have so much unquestionable power and dominance over so many people. And I truly believe it to be unacceptable. How does the little guy ever get out of his rut and make it through the ranks? The simple answer is that he doesn’t. And as long as we allow the market to be a mechanism of dealing with our changing climate, carbon footprints will not be reduced. Simply swept under the rug, for the under-developed nations to deal with and pay the price for. So I say, our focus should always be on “the people,” because it is the people that have to deal with the consequences.

  3. Shakirudeen

    This is an interesting one Greg. I think our focus should be on the environment, people and market. If we are able to effectively put a price on this third-party effect produced by the developed nation and industries, then we might be able to regulate their emissions. By strengthening the market mechanisms, we can address the issue of neo-liberal globalization that you raised.

    There is also the question of our moral rights to the unborn generation. This means we have to keep this planet habitable for the future generation. A way to achieve this is through developing sustainably.