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Climate Forests Water

Making Environmental Markets Work

Lessons from Early Experience with Sulphur, Carbon, Wetlands, and Other Related Markets

By Ricardo Bayon - Forest Trends
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Ever since the passage of the 1990 amendments to the US Clean Air act and the creation of a market in sulfur dioxide (SO2), it has become clear that market mechanisms can be effectively used to achieve environmental policies. But markets are neither infallible nor automatic. They have blind spots and they need to be designed effectively, if they are to effectively achieve environmental ends. This paper defines markets as regular gatherings of people for the purpose of buying and selling goods or services. Such markets are distinguished from public payments to private landowners for ecosystem services, or private deals between a few buyers and sellers.