Environmental Markets: Equity and Efficiency

By Graciela Chichilnisky; Geoffrey Heal | Go to book overview
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Chapter 10
Securitizing the Biosphere
Graciela Chichilnisky
Geoffrey Heal

A handful of firms in traditionally dirty industries have decided that they can make more money by embracing environmental goals than by fighting them. At the leading edge of the environmental movement, British Petroleum, Monsanto, Dupont, Compaq, 3M, S.C. Johnson, Dow Chemical, Weyerhauser, and Interface are major corporations improving their financial performance by cleaning and greening their operations [1]. They are making money by reducing their environmental impact. This is not entirely surprising: Costanza et al. [2] have suggested that environmental services have great value, although they did not indicate how this value can be realized. Here we take this line of argument further and propose various economic instruments that would allow investors to obtain economic returns from environmental assets such as forests and landscapes while ensuring their conservation. One of us [3] has proposed the creation of an international financial institution to promote this process, a suggestion officially adopted by the Group of 77 developing countries and China in the Kyoto meetings on December 1, 1997.

The environment's services are clearly valuable. The air we breathe, the water we drink, and the food we eat are all available only because of services provided by the environment. How can we transform these values into income while conserving the underlying natural capital? We have to “securitize” natural capital and environmental goods and services and enroll market forces in their conservation. This means assigning to corporations—possibly innovative public-private corporate partnerships—the obligation to manage and conserve natural capital in exchange for the right to the benefits from selling the services provided. E. O. Wilson [5] talks of “the need to draw more income from the wildlands without killing them, and so to give the invisible hand of free market


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Environmental Markets: Equity and Efficiency


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