Buying environmental insurance: Prospects for trading of global climate-protection services

In order to alleviate the threat of global climate change, coordinated international action is needed. This cooperation should include multilateral agreements and new economic initiatives to help implement measures that will slow the accumulation of carbon dioxide in the Earth's atmosphere due to tropical deforestation and fossil-fuel use. An international market in environmental services can help to safeguard the Earth's climate and foster economic development through a North-South transfer of financial resources.We suggest international carbon-emission offsets (ICEOs) as a means by which international markets, under a policy umbrella such as a multilateral climate-protection treaty, could trade carbon-saving services. Such a market would provide a currency for rewarding actions that reduce global carbon emissions, allowing carbon emitters to seek the least expensive ways to reduce emissions. This currency would transfer cash and/or debt relief from industrialized nations to developing nations, allowing the developing nations to profit from the use of clean energy technologies and the protection, rather than depletion, of tropical forests.