This is the second book in a series studying the economic implications of human domination of the planet. The first, Valuing the Future: Economic Theory and Sustainability (Geoffrey Heal, 1998), addressed the conceptual issues raised by concerns about sustainability.
Global environmental markets became a timely topic when the 1997 Kyoto Protocol provided a foundation for the development of the first global carbon markets. The protocol is a positive event particularly for the editors of this book, who for many years worked closely with the United Nations Climate Convention and recommended these markets as the institution of choice for the reduction of global carbon emissions.
Several of the articles in Environmental Markets are an outgrowth of global negotiations and a product of the lively debate involving the role of distribution and of efficiency in these carbon markets. Because distribution and efficiency are at the core of the relationship between industrial and developing countries, they are key concerns in resolving the thorny issues that have stalled the negotiations for several years. An international meeting organized by the OECD in Paris in June 1993, in which the major players in the global negotiations participated, explored the connections between equity and efficiency. At that meeting, the first-named editor presented findings that are included in this book, namely, that global carbon markets trade unusual goods—global public goods that are privately produced—and that this circumstance leads to an intrinsic connection between distribution and efficiency that does not exist in standard markets. In environmental markets, therefore, the traditional separation of equity and market efficiency may break down. This fact leads to new policy implications for global carbon markets, possibly providing a foundation for win-win solutions in the global negotiations that can benefit both rich and