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Markets – are they good or bad? Emissions trading basically uses the capitalist system to try to deliver an environmental good. But if market based capitalism and its obsession with growth helped get us into this situation in the first place can we really trust the market to get us out of trouble?

I think Amory and Hunter Lovins and Paul Hawken got it right when they set out their theories for harnessing market forces to help us stay withing ecological limits (I always recommend chapters 12 and 13 of their excellent book ‘[Natural Capitalism](http://www.natcap.org/ “”)’ to anyone just getting into the issue of climate change – it’s clear, leaves you with a sense of optimism and it’s available for free online)….

Markets don’t have any morality – they deliver what the rules that govern them tell them to deliver. I watched a fantastic docmentary film last night (thanks Andres) which really showed the impact the regulatory framework can have on markets. [King Corn](http://www.kingcorn.net/ “”) tells the story of two college graduates who move to Iowa to farm an acre of corn. It may not sound like a rip roaring tale of adventure but it really is a great film – an entertaining and edifying tale made by two unassuming, cool guys.

The point is that a change in agriculture policy in the ’70s lead to a massive change in the corn industry. Farming policy used to regulate corn prices by keeping supply and demand in balance – essentially regulating how much land was in production and paying farmers not to farm if supply was in danger of outstripping demand. But then it was decided that cheap food was the ultimate goal and so subsidies shifted to reward higher productivity. With the cap on supply taken away, and a huge incentive created to increase the yield per acre, the volume of corn on the market soared – prices crashed but subsidies kept being paid and the market found new uses for the vast supply of cheap corn that was now available – hence corn fed cattle and corn syrup in almost everthing – and all the problems that has caused – sick cattle, diabetes, obesity etc. The policy makers got cheap food but what they should have been aiming for was affordable good food.

I’d like to think people are motivated to deliver the things society asks them to – at the moment growth is the metric by which we are judged – we need more of everything – this is progress. But if we change the rules to say quality also matters, not just quantity, and then create the right metrics so we can compare progress, we might be able to harness our inventiveness and drive to deliver great things.

Emissions trading is an experiment in getting the rules right to deliver a solution – the dominant metric is still ultimately money, but part of me hopes that the sheer challenge of reversing the emissions metric is also part of the motivation. If I’m right people will be willing to pay to increase the number of tonnes that are not emitted. That’s what we’re exploring with sandbag – we need to do some more work on how we bring this metric to life – but it would be great if we can create our own market – demanding and competing to cancel as many emissions permits as possible. And ideally have fun trying!