Monday, November 17, 2008

Rain forest bonds

This could be an interesting addition to carbon trading.

So, I buy a bond that promises a certain rate of return in 15 years. The proceeds from the sale of the bond are used to finance rain forest conservation efforts. The rain forest conservation is used as a means of earning carbon credits which are sold on the open market for a profit. The profit is used to pay me back in 15 years. Cool.

Anyone see any problems?

3 comments:

Drew Moxon said...

Wow, that's an innovative idea. I wonder how carbon markets would respond? If they started selling the bonds now as a hedge against future carbon policy for firms, that could have the effect of raising prices for carbon when the market actually opens (although until the market actually opened, they would probably have to use Europes attempt at a carbon market).

Antonio Joyette said...

THis is another interesting article. Hmmm. Well I like it because the sector that broke it will be made to fix it. The problem was caused by the market, so use market mechanisms to fix it. I am not in favour of public funds being used if it is suggested. However, this may be a golden opportunity for governments so endowed with extra capital to make hefty investments for the future. This is great! Especially with guarantees? Wow i am in...well not 100% .. I am straddling the fence with..I just have a feeling some capitalist initiative need funds for along term project...I don't want to hear the environmental stock market crash....Golly!..

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