Equity and Efficiency in Emission Markets:
The Case for an International Bank for
Global institutions created after World War II—the World Bank, the International Monetary Fund (IMF), and the General Agreement on Tariffs and Trade (GATT)1 —led the world into an unprecedented period of industrialization, material expansion, and global commerce. Called the Bretton Woods institutions, they emerged from the premise that trade and economic growth could help defuse international conflicts and accelerate the reconstruction after the
The proposal for the International Bank for Environmental Settlements (IBES) was officially presented at the May 1994 Workshop on Joint Implementation organized with the support of the Global Environmental Facility (GEF) and the Framework Convention on Climate Change(FCCC) at Columbia University, in various FCCC meetings and at an invited address to the annual meetings of the World Bank in December 1995, see also Chichilnisky . In the preparation of this proposal, I have benefited from the discussions of several members of the Intergovernmental Negotiating Committee (INC) of the FCCC, who provided important insights: Minister Raúl Estrada-Oyuela, chair of the INC/FCCC; H. E. Ismail Razali, ambassador, permanent mission of the Malaysian to the United Nations; Mr. Xialong Wang, third secretary, Chinese permanent mission to the United Nations; Mr. James Baba, deputy permanent representative of Uganda to the United Nations; and Dr. John Ashe, counsellor, permanent mission of Antigua and Barbuda to the United Nations. In addition to emissions trading, the proposal included the creation of an IBES, which could help reconcile efficiency and equity in emissions markets; the two key features are deeply connected in these type of markets, as shown in this chapter. This chapter originally was presented at a workshop organized by New York Law School at the Villa La Pietra in Florence in the summer of 1996. I thank the participants of the workshop, especially Richard Stewart, Stephen Breyer, and Richard Ravel, for valuable comments and suggestions.