THE STARS IN ECONOMICS

THE STARS IN ECONOMICS

Stanley Fischer, central bank governor extraordinaire, by Prakash Loungani

During his tenure in academia, Fischer established himself as a preeminent macroeconomist before taking on the job as chief economist at the World Bank. As the IMF's deputy in the 1990s, he dealt with economic, financial, and debt crises in countries the world over.
Stanley Fischer on Charlie Rose show

Solving History’s Puzzles
Carmen Reinhart, Harvard economist, by James L. Rowe Jr.
The profession’s most-cited female and co-author of one of the most important economics books of the past decade, Reinhart relies on empirics to solve economic puzzles.
The $787 Billion Question
Christina Romer, former chair of the U.S. Council of Economic Advisers, by Maureen Burke
Taking up the role of chair of the U.S. Council of Economic Advisers in 2009—in the midst of unprecedented economic uncertainty—Romer grappled with the most severe downturn since the Great Depression. Now back at Berkeley, she continues to advocate decisive government action to boost employment.
Romer on monetary policy
A Project in Every Port
Jeffrey Sachs, peripatetic development economist, by Prakash Loungani
Sachs played key economic advisory roles in governments the world over—offering solutions on transitioning to capitalism or fighting hyperinflation, but he has become more widely known and recognized for his tireless crusade against poverty.
Angelina Jolie travels with Jeffrey Sachs
The Man with the Patience to Cook a Stone
Justin Yifu Lin, first World Bank Chief Economist from a developing or emerging economy
From humble beginnings, Lin’s talent and tenacity helped him rise to success as one of China’s top economists. His “New Structural Economics” has spurred dialogue and a rethinking among development economists as to how governments can strategically target industrial development.
Lin’s book launch
Minder of the Gaps
Laura Tyson, first woman to head the U.S. Council of Economic Advisors, by Jeremy Clift
As an architect of President Clinton’s economic policy, Tyson promoted “aggressive unilateralism” in trade. Now, based at the University of California, Berkeley, she continues to identify ways to promote growth in the face of global competition and technological change.
Tyson on gender equality
Tyson on education
An American Globalist
C. Fred Bergsten, Peterson Institute founder, by Prakash Loungani
From positions in the Nixon and Carter administrations in the 1970s to inaugurating and heading up what would become one of the preeminent economic think tanks world-wide, Bergsten has devoted much of his life to furthering global economic integration.
Bergsten on video
Second Time Around
Ngozi Okonjo-Iweala, former World Bank Managing Director, by Jeremy Clift
Okonjo-Iweala returned to Nigeria in 2011 to take on the role of Nigeria’s economic czar. Growing up in the midst of a civil war instilled a sense of determination and hard work that she has taken with her throughout a successful career in development economics.
The Master Artisan
Elinor Ostrom, first woman to win economics Nobel, by Maureen Burke
Heralding a cooperative and interdisciplinary approach herself, Ostrom has amassed a body of work examining social norms and what makes people cooperate—including to the extent that they avoid “tragedy of the commons” outcomes, situations previously accepted by many economists as unavoidable.
The Human Face of Economics
George Akerlof, Berkeley professor and founder of identity economics, by Prakash Loungani
Well known for his early work on the economic consequences of information asymmetries, Akerlof’s long career at Berkeley also yielded a body of work in which he used innovative ways to look at unemployment. He has also been a perennial voice calling for sensible government regulation in the banking sector.
George Akerlof on Identity Economics
Residual Brilliance
Robert Solow, giant in the field of economic growth theory, by Atish Rex Ghosh
Solow looked at the sources of growth—capital, labor, and technological progress, finding the latter to be the main driver of long-term growth. For decades, his work has influenced governments’ policies across the world as they look to increase funding for technological research to spur economic growth.
Robert Solow on reshaping economics
Fun & Games
Avinash Dixit, economic theorist, by Jeremy Clift
Dixit’s work on modeling economic behavior under the conditions of “monopolistic competition” became a foundation for research in the field. As a long-time professor at Princeton, Dixit pursued research interests ranging from game theory to international trade to the role of democratic institutions in economic development.
Undercover Operator
Maria Ramos, academic-turned-Treasury mandarin, by Simon Willson
From key positions in the South African finance ministry, Ramos adeptly charted the policy options needed to help the country attain fiscal stability in the 1990s following its transition to democracy. Later as a bank chief executive, she applied the same brand of pragmatism and vigor as she had during her government years.
The Unlikely Revolutionary
Jang Hasung, Dean of Korea University, by Hyun-Sung Khang
Business professor, but activist at heart, Jang established himself as a crusader for corporate reform seeking greater accountability and transparency in the giant, family-run conglomerates of Korea.
Breacher of the Peace
Daron Acemoglu, Istanbul-born economist, by Simon Willson
Beyond economics, Acemoglu’s varied research interests have included a wide spectrum of political economy subjects. Raising questions on how economics and politics intersect, he often takes unique approaches by explaining topics, such as democracy, from an economic perspective.
The People’s Professor
Joseph Stiglitz, former World Bank Chief Economist, by Prakash Loungani
Having amassed a body of work examining the rather profound effects that the adequacy and availability of information has on economic transactions, Stiglitz also played a key role as chairman of the U.S. Council of Economic Advisors in the 1990s.
Stiglitz on Iceland
Stiglitz on reshaping economics
Michael Spence on reshaping economics
Questioning a Chastened Priesthood
Daniel Kahneman, psychologist who helped build the field of behavioral economics, by Jeremy Clift
Well known for his pioneering work integrating aspects of psychological research into economic science, Kahneman’s work is regarded as having laid the foundation for a new field of economic research—behavioral economics.
Still the Bottom Billion
Paul Collier, Director for the Center for the Study of African Economies at Oxford University, by Glenn Gottselig
Eternal advocate for the “bottom billion” living in the world’s poorest countries, Oxford University professor Paul Collier offers a prescription for helping lift low-income countries to higher levels of economic development.
Seeing Crises Clearly
Nouriel Roubini, founder of RGE Monitor, by Prakash Loungani
As one of the few voices that predicted many of the events leading to the 2008-09 global economic crisis, Roubini captured the attention of the economics profession. A professor at New York University, he also heads a global economic and market strategy research firm.
From Visionary to Innovator
Robert J. Shiller, best-selling author, by Paolo Mauro
Well known beyond the worlds of finance and economics thanks to the indices on home prices that bear his name, Yale professor Robert Shiller has studied and written extensively on the factors leading to bubbles in the economy.
The Catch-Up Game
Michael Spence, former Dean of Stanford Graduate School of Business, by Archana Kumar
Spence, best known for his groundbreaking work explaining how employees and employers interact, also served as Chair of the Commission on Growth Development, which had been tasked with determining strategies for sustainable growth.
Rise of the Undaunted Empiricist
Beatrice Weder di Mauro, first woman on Council of Economic Experts, by Simon Willson
Known for her direct and persistent style of inquiry and research, Weder di Mauro brought to the German Council of Economic Experts a record as a pathfinder in exploring the role of banks in transmitting financial contagion.
A Legacy of Model Elegance
Jacques Polak, former IMF chief economist, by James L. Rowe
A student amidst the Depression era and later signing on to work at a newly-created IMF, Polak became an economic force of the 20th century, pioneering the research that would become the basic economic approach of the IMF.
The Quest for Rules
John Taylor, former member of the Council of Economic Advisors, by Prakash Loungani
Best known for his namesake rule that described the response of the U.S. Federal Reserve’s interest rate target to inflation and business cycles, Taylor gained notoriety as the result of his simple equation‘s wide acceptance among central banks as a useful guide for policy.
Harnessing Ideas to Idealism
Michael Kremer, innovator on public policy problems, by Arvind Subramanian
Kremer, who helped pioneer the creation of a new instrument to boost the development of vaccines by securing advance promises to pay for them, also helped introduce a major methodological innovation in empirical development economics: the randomized evaluation of public policy interventions.
Topping the Charts
Robert Barro, one of the founders of new classical macroeconomics, by Prakash Loungani
As one of the ringleaders of the Chicago School–led revolution, Barro and his work became well known to scholars and policymakers in the 1970s, who were at that time reconsidering the Keynsian approach that centered on a government's ability to smooth out business cycles.
A Master of Theory and Practice
Guillermo A. Calvo, former chief economist at the Inter-American Development Bank, by James L. Rowe
As one of the preeminent scholars of both modern macroeconomic theory and the economics of emerging markets, Calvo contributed to the critique that incorporated people's expectations about policy, provided insights into time inconsistency and credibility issues, and sought better modeling of the economy to account for such distortions as "sticky prices."
Navigating Unchartered Waters
Otmar Issing, first chief economist of the European Central Bank, by Camilla Andersen
Issing helped set the course for the European Central Bank to become one of the most credible and powerful central banks in the world, adeptly navigating uncharted waters as the institution sought to implement inflation goals for the newly created euro area.
Ahead of His Time
Robert Mundell, former advisor to the UN, IMF, and World Bank, by Laura Wallace
A pioneer of modern international economics and inspiration to a generation of researchers, Mundell has been lauded for his analysis of monetary and fiscal policy under different exchange rate regimes and his analysis of optimum currency areas.
Economist as Crusader
Paul Krugman, winner of both the Nobel and Pulitzer Prizes, by Arvind Subramanian
Economics made Krugman famous; punditry made him a celebrity. As a hard-hitting political columnist Krugman has made influential contributions to both international trade theory and international macroeconomics.
The Quiet Integrationist
Haruhiko Kuroda, head of the Asian Development Bank, by Jeremy Clift
As President of the Asian Development Bank, Kuroda set in motion an ambitious agenda for a new financial architecture for Asia, all the while addressing the risks of a bird flu pandemic, the effects of the Asian tsunami, and a deadly earthquake in Pakistan.
Economics with a Social Face
Nora Lustig, Latin American development economist, by Conny Lotze
Lustig has been in the vanguard of development economists who not only insisted on the link between poverty reduction and macroeconomic policy, but also advocated well-targeted social policies to help the poor break out of poverty for good.
The Globalization Guru
Jagdish Bhagwati, founder of the International Journal of Economics, by Arvind Subramanian
Abandoning law for economics at when he began his studies at Cambridge University, Bhagwati went on to become a leading economist in the area of trade and development and a tireless opponent of protectionism and advocate of free trade.
Super Mario and the Temple of Learning
Mario Monti, former President of Bocconi University, by Jeremy Clift
As the EU’s former Commissioner for Competition, Monti left a lasting legacy on both the corporate world and competition policy. As the first chairman of Bruegel, he continued to shape European and global economic policymaking.
Managing the Currency of an 'Out' Country
Bodil Nyboe Andersen, former Denmark central bank governor, by Camilla Andersen
After her stint as a lecturer at Copenhagen University, Andersen went on to serve on the management board of Unibank, Denmark’s second largest bank. As central bank governor of Denmark, she presided over the bank during a tumultuous time.
In on the Ground Floor
Linah Mohohlo, Botswana central bank governor, by Jacqueline Irving
Beyond her achievements in managing Botswana's monetary policy, Mohohlo also played a role in the private sector, sitting on the boards of several major companies, and has been an influential voice calling for action from the international community on issues such as development aid, fair trade, and debt relief.
Freedom as Progress
Amartya Sen, inventor of better measures of poverty, by Laura Wallace
Known for restoring “an ethical dimension” to the discussion of vital economic problems by combining tools from economics and philosophy, Sen’s contributions to social choice theory, welfare economics, and economic measurement have been seminal.
Budget Guru Takes a Stand
Alice Rivlin, former vice-chair of the Fenderal Reserve, by Elisa Diehl
With more than 30 years in service in the U.S. government, Rivlin was the founding director of the Congressional Budget Office and also served in the Office of Management and Budget and the U.S. Federal Reserve.
Getting There First
Martin Feldstein, former chair of the Council of Economic Advisors, by Prakash Loungani
Feldstein made a lifelong study of the effects of taxes and social insurance while also pioneering the new field of health economics. In his tenure as president of the National Bureau of Economic Research, he led in the revitalization of the Bureau as a top-notch think tank.
Hearing the Dogs Bark
Hernando de Soto, best-selling author, by Jeremy Clift
As founder of the Lima-based think tank, the Institute for Liberty and Democracy, de Soto argued that the key to both defeating international terrorism and securing capitalism is enabling poor entrepreneurs across the developing world to become part of the system rather than excluded from it by bureaucracy and red tape.
Putting Economic Policy to the Test
Esther Duflo, Massachusetts Institute of Technology economics professor, by Asimina Caminis
As a development economist and one of the co-founders of the Poverty Action Lab, Duflo challenges some of the cherished assumptions on which many development policies are based.
Concentrating the Mind
Allan H. Meltzer, expert on development and applications of monetary policy, by Jeremy Clift
Meltzer, who briefly served in the U.S. Treasury during the presidency of John F. Kennedy and later was an advisor to Ronald Reagan, is regarded as one of the icons of American economics.
The Lab Man
Vernon Smith, senior fellow at Cato Institute, by Jeremy Clift
As a pioneer in the use of experimenting in the controlled environment of a laboratory to test economic theories, Smith’s work helped shift the perception of economics as a nonexperimental science that had to rely on observation of real-world economies rather than the controlled experiments.
Challenges of the New Millennium
John Kenneth Galbraith, former president of the American Economic Association, by Asimina Caminis
Longtime professor of economics at Harvard University, Galbraith offers his views on the inherent instability of capitalism, why democracy is important for economic growth, and how financial crises offer the opportunity to “clean up” incompetence in the banking system, the industrial system, and, to some extent, in government.

Reforming Energy Subsidies

Reforming Energy Subsidies

---IMF

Subsidies are intended to protect consumers by keeping prices low. But they also come at a high cost.

Subsidies are expensive for governments—and therefore taxpayers—to finance and can hinder governments’ efforts to reduce budget deficits. They also compete with other priority public spending on roads, schools, and healthcare.
All consumers—both rich and poor—benefit from subsidies by paying lower prices. Governments could get more “bang for their buck” by removing or reducing subsidies and targeting the money directly to programs that help only the poor.
Subsidies encourage excessive energy consumption, which accelerates the depletion of natural resources. They also reduce the incentive for investment in other forms of cleaner energy.
Measuring subsidies
Producer subsidies often arise because energy producers—usually state-owned enterprises (SOEs)—are inefficient and have high costs of production. In the electricity sector, producer subsidies can also arise because of non-payment of bills and power distribution losses which weaken the revenues of SOEs.
Consumer subsidies can include two components: a pre-tax subsidy and a tax subsidy.
Pre-tax subsidies exist when energy consumers pay prices that are below the costs incurred to supply them with this energy. Taking gasoline as an example—and remembering it is internationally traded, the pre-tax subsidy is simply the international price of gasoline less the final price paid by consumers at the pump.
Tax subsidies exist if taxes for energy are below their efficient level. This has two components. First, energy should be taxed the same way as any other consumer products. If energy taxes are lower than this, there is a tax subsidy. Second, some energy products contribute to pollution and global warming—efficient taxation requires that the price of energy should reflect these adverse effects on society. In most countries, taxes on energy fall far short of this, implying the full costs of consuming energy are not reflected in its price, as it should when energy is priced right.
Post-tax subsidies are the sum of pre-tax and tax subsidies. Post-tax subsidies are four times larger than pre-tax subsidies, and advanced economies account for 40 percent of post-tax subsidies. But as a share of gross domestic product, post-tax subsidies are roughly eight times larger in the Middle East and North African region than in advanced economies.

Reform efforts

In 2009, the Group of 20 advanced and emerging market economies called for a phase out of inefficient fossil fuel subsidies in all countries, and reaffirmed this again in 2012.
Despite the potential gains, many countries have had difficulty reforming subsidies. When reforms are made, prices increase, and this has often led to widespread public protests.
The absence of public support for subsidy reform is in part due to a lack of confidence in the ability of governments to shift the resulting budgetary savings to programs that would compensate the poor and middle class for the higher energy prices they face.
This problem is particularly challenging in oil-exporting countries, where subsidies are seen as a mechanism to distribute the benefits of natural resource endowments to their populations and where the capacity to administer targeted social programs is typically limited.
Governments are also often concerned that higher energy prices will contribute to a higher rate of inflation and adversely affect their competitiveness. Subsidy reform can also be complex when it includes trying to reduce inefficiencies and production costs, as is often the case for the electricity sector.

A plan for reform

While there is no single recipe for successful subsidy reform, country experiences suggest that the following ingredients are needed:

• a comprehensive energy sector reform plan with clear long-term objectives with an analysis of the impact of reforms;
• transparent and extensive communication and consultation with stakeholders, including information on the size of subsidies and how they affect the government’s budget;
• price increases that are phased-in over time;
• improving the efficiency in state-owned enterprises to reduce producer subsidies;
• measures to protect the poor through targeted cash or near-cash transfers or, if this option is not feasible, a focus on existing targeted programs that can be expanded quickly; and
• institutional reforms that depoliticize energy pricing, such as the introduction of automatic pricing mechanisms.

ADB on Inequality

Inequality in the Asia and Pacific Region: 12 Things to Know

Despite Asia's remarkable economic progress over the last decades, inequality remains a problem in the region.

Inclusive growth, defined as economic growth with equality of opportunity, is one of the three strategic objectives of ADB. Source: ADB document Framework of Inclusive Growth Indicators 2013

From 1990 to 2010, Asia and the Pacific has halved extreme poverty and seen an annual rise in average per capita income of nearly 6%. However, data shows a worsening of the rich/poor gap in many economies. Source: ADB document Framework of Inclusive Growth Indicators 2013

The best improvements have been seen in poverty reduction (at the $2 a day measure), under-five mortality rates, and in average years of schooling. Source: ADB document Framework of Inclusive Growth Indicators 2013

Countries with high Gini coefficients (inequality measure) where the poorest quintile of the population had the lowest shares of national income or consumption included the People's Republic of China, Malaysia and several Pacific Islands. Source: ADB publication Key Indicators for Asia and the Pacific 2013

Child mortality has been cut in half over the last two decades but progress on reducing the number of underweight children has been poor. Source: ADB document Framework of Inclusive Growth Indicators 2013

Many workers earn too little to lift their families out of poverty and the number without formal work exceeded 40% of the total employed in 18 economies, with the proportion being over 80% in India and Bangladesh. Source: ADB publication Key Indicators for Asia and the Pacific 2013

Electricity consumption over the last two decades has more than tripled but wide disparities still exist between rural and urban areas, while cellular phone subscriptions have grown in all economies. Source: ADB document Framework of Inclusive Growth Indicators 2013

The region has seen an increase in the average number of years children stay in school and most economies have improved gender parity in primary education. However, gender parity in the labor force has deteriorated. Source: ADB document Framework of Inclusive Growth Indicators 2013

The People's Republic of China and 15 other economies had youth (aged 15-24) literacy rates of at least 99% but 11 economies had rates below 95%, including Pakistan with 71%. Source: ADB publication Key Indicators for Asia and the Pacific 2013

Social security spending on health as a percentage of government expenditure has risen but there are sharp disparities amongst countries. Source: ADB document Framework of Inclusive Growth Indicators 2013

Migrant workers' remittances are now a major source of foreign exchange across Asia and the Pacific region. Source: ADB publication Key Indicators for Asia and the Pacific 2013

Migrant workers' remittances is now a major source of foreign exchange across Asia and the Pacific region. Source: ADB publication Key Indicators for Asia and the Pacific 2013

BEHAVIOUR OF GOLD PRICE

BEHAVIOUR OF GOLD PRICE

-Dr.Debesh Bhowmik

The steady gold price was observed in the gold standard at 35$/ounce till 1971.After the breakdown of Brettonwoods , the gold price steadily increased  upto 850$/ounce within 1979,then inflation started to fall down which induced falling gold price which converged around 300-500 $/ounce till 2004 but within 2008  ,it reached to 950$/ounce through Katrina agreement and credit crunch .From January 2005 to January 2010,gold price again steadily stepped up to more than 1800$/ounce but during 2013 it again started to behave volatile with falling trend.

The future forecast of gold price is observed as upward trend reaching 3400$/ounce within 2016.

THE CARBON MARKET AND CARBON FINANCING

The Carbon Market and Carbon Financing

----Dr.Debesh Bhowmik

What is Emissions Trading?

‘Carbon trading’, or ‘emissions trading’, takes place when there is sale and purchase of:[i] ‘permits’ or ‘allowances’ to emit greenhouse gases; or[ii] ‘certificates’ that prove a certain reduction in emissions from a particular activity beyond what would otherwise have been the case (i.e. ‘business as usual’ emissions); or[iii] certificates that indicate a certain amount of actual emissions have been ‘offset’ somewhere else, through for example, carbon sequestration.

Usually, each permit, allowance or certificate is a document, often electronic, representing one tonne (1,000 kg) of carbon dioxide equivalent (‘CO2e’) that was emitted, or not emitted below business-as-usual projections for emissions. The term CO2e means that greenhouse gases other than carbon dioxide are converted to tones of CO2e, based on their relative contribution to global warming. This provides for a single, uniform means of measuring emissions reductionsfor multiple greenhouse gases.

What is the Carbon Market?

Transactions for the sale of emissions permits, reductions or offsets together comprise the ‘carbon market’, which has grown exponentially since the entry into force of the Kyoto Protocol in 2002. In fact the term ‘carbon market’ is not entirely accurate: because carbon dioxide is only one of several greenhouse gases that can be ‘traded’; and because there is not a single, unified international market for emissions reduction purchases. Rather, there are various markets in operation around the world, which can be classified as either regulated or unregulated markets and which interact with one another in different ways.

‘Regulated markets’ are emissions trading schemes set up under domestic or international law to provide a means for specified actors (often large industrial or power companies) to meet emissions reduction targets. Key examples include the European Union Emissions Trading Scheme and the New South Wales and Australian Capital Territory Greenhouse Gas Abatement Schemes. Such schemes usually provide that the actors can trade emissions reduction allowances among themselves (i.e. one company that has exceeded its emissions reduction target could buy surplus allowances from another company that has emitted less greenhouse gases than its specified target). Or it may provide for a company with an emissions reduction target to buy offsets or credits for emissions reductions achieved in some other activity, then apply these

toward meeting its own target.

‘Unregulated markets’ arise where there are private agreements to trade or offset emissions or emissions reductions among actors who may not be legally bound to meet an emissions reduction target, but who have decided to take action anyway. Sometimes these are one-off, single agreements and sometimes they are part of wider voluntary schemes, each with its own procedures. WWF recently published a guide that explains the voluntary carbon market and compares some of the big voluntary schemes in existence.

What is the Size of the Market?

In light of the fragmented nature of the market, it is difficult to describe precisely its current and

projected size. Research indicates that the entire global market was worth more than US$30 billion in 2006, three times its value in the previous year , to then over US$60 billion in 2007. The biggest part of the market is the European Union Emissions Trading Scheme. There are no clear figures on Indigenous involvement in the global market.

Generating Tradable Credits

Types of Activities that Generate Tradable Credits

Key greenhouse gas mitigation activities that can generate credits or offsets for sale include energy efficiency, renewable energy and land use and forestry activities. Other kinds of activities that may also generate credits but which are not addressed here include the management of methane released from landfill or waste sites or by livestock, and the substitution of oil, coal or diesel with gas, biofuels or other renewable energy for use in transportation or industrial processes. The first three are described in more detail below.

Energy Efficiency Projects

‘Energy efficiency’ involves reducing the amount of energy used to operate a product or to carry out a process, without reducing the quality or level of service. You might choose, for example,

a car that needs less fuel to travel the same distance at the same speed as another that uses more fuel. Related to that, energy conservation may involve reducing the demand or need for energy. Energy efficiency activities can be undertaken in industry, agriculture, electricity generation, transportation or households among others – really in any activity where an opportunity exists to use energy in a more efficient way. One example of an energy efficiency project that could attract carbon financing would be the replacement of old, inefficient light bulbs throughout a community with new light bulbs that use less electricity to give the same amount of light.

Renewable Energy Projects

‘Renewable’ energy can be used to provide electricity, heating or fuel for transportation similar

to the way we use fossil fuels for these purposes. Such sources are called ‘renewable’ because, unlike oil, gas and coal, there is not a finite amount of them in the earth. Key renewable sources include wood, waste decomposition, geothermal activity, wind and solar energy. The use of renewable sources for generating energy usually involves lower emissions of greenhouse gasesthan the use of fossil fuels does. An example of a renewable energy project would be to switch from using a diesel generator for providing electricity, to using solar panels to provide electricity.

Land Use and Forestry Projects

As plants and trees act as carbon sinks, various ‘land use and forestry’ activities can lead to a reduction in atmospheric greenhouse gas emissions. In particular, reducing the rate of, or avoiding entirely, land clearing or deforestation is one such way because these activities release carbon dioxide into the atmosphere. Another is by planting new trees to absorb more carbon dioxide. Other land management practices may also be undertaken - such as carrying out controlled burning in the early part of the dry season to prevent more frequent and intense bush fires later in the dry season. Controlled burning may not only help to reduce emissions, but may also help to control pests and weeds, maintain traditional Indigenous land management

practices and provide for employment and training opportunities.

What is Involved in Generating Tradable Credits?

Who may buy and sell credits or offsets, and the particular procedures involved in generating

credits for sale, vary considerably from one regulatory scheme to the next and from one transaction to the next within the unregulated market. Often times, the purchase of credits or offsets will take place by way of a legal agreement or contract between two or more ‘parties’. The terms of the agreement may be decided upon by the parties, however, a regulatory scheme under which a sale takes place may also require that certain terms be included in the agreement. Here are some requirements that are common in the purchase or financing of emissions reductions.

1) Additionality:

Generally speaking, tradable emissions reductions must occur in addition to any reductions that would have occurred in a business-as-usual situation - i.e. they must be emissions reductions that would not have occurred without the funded activity or project. This requirement is called ‘additionality’. For example, if a community has already replaced diesel generators with solar panels for providing hot water that uses less greenhouse gases, it may not be able to sell credits or offsets from the solar panels because any reduction in the amount of emissions was likely to occur anyway.

2) Measurable Emissions Reductions:

In light of the above, and in order to determine the precise nature and cost of a transaction, the emissions reductions or offsets must not only be additional, but they must be capable of being measured so that the exact amount can be ascertained.

3) Anthropogenic Emissions:

The emissions or emissions reductions must generally be related in some way to human activity (called ‘anthropogenic’), rather than simply being naturally occurring emissions or emissions reductions.

4) Age of the Forest or Plantation:

In the case of carbon sequestration activities (where greenhouse gas emissions are offset by an amount of carbon dioxide stored in a designated forest or plantation), the forest must usually have been planted after 1989 or some other year as designated in the agreement or rules of the trading scheme.

5) Expiration of Forest Credits:

There is sometimes a concern about the ‘nonpermanent’ nature of credits from forest-related activities - in particular, a concern that carbon dioxide offset or stored through forestry activities may not be permanent if the trees in the forest die, are burnt down or are cleared. Because of this concern, forestry-related credits may sometimes be time bound, which means that they exist for only five, 20 or 30 years, after which time they expire. In this case, the agreement may provide that the expired credits must be renewed or replaced at the end of the time period.

6) Sustainable Development:

The proposed activity should contribute to the ‘sustainable development’ of the community with in which it operates. This means that it should form a part of the wider economic, social and environmental development of the community and avoid other detrimental consequences.

Planning for a Project

Before signing an agreement, the project developer or seller of the credits will usually document a clear plan that sets out: what the project will involve; how the emissions reductions or offsets will be measured and certified; the relevant actors and stakeholders; how all stakeholders have been consulted; and what are likely to be the environmental and other impacts and risks of the project. Here are some issues to think about when developing a project plan.

1) Measuring Emissions Reductions:

For the purposes of measuring the precise amount of emissions reductions that result from any funded project (and so as to ensure that there is additionality), it is important to know the quantity of greenhouse gases already being emitted from a targeted activity, and to be able to continue measuring emissions from that activity after the project is implemented.

2) Methodology for Measuring Emissions Reductions:

There are a range of existing ‘methodologies’ for measuring the emissions that result from various daily and commercial activities. There are also organisations, government and scientific, that may be able to help communities to measure the emissions resulting from any single activity, so communities may not have to face this issue alone. Often, assistance from a partner organisation with measuring emissions will itself be a part of the funded emissions reducing project. So while this is a technical point, it does not have to be an insurmountable barrier to involvement in emissions reduction projects.

3) Wider Impact of Project:

In planning for an emissions reducing activity, it is important to consider what wider impacts the project may have on the community and its environment, both good and bad, and to try to ascertain if the project will help the sustainable development of the community.

4) Consultation:

It is important that all relevant stakeholders and community representatives are consulted during the planning of a project. Often times, the buyer and/or any third party financer of an emissions reducing project will seek an assurance that the local community has been consulted and is supportive of the project. Similarly, the local community and/or seller might wish to ensure that the potential buyer is acceptable to them.

5) Right to Emissions Reductions:

When a proposed activity, particularly forestry or land activities, are to take place on land that is not owned by the project developer, it may be necessary to clarify beforehand who would own the legal property rights to any emissions reduction credits or offsets generated. The same applies if the project developer owns the trees on the land, but not the land itself.

6) Verification/certification of Emissions Reductions:

An authorised third party may need to ‘verify’ and ‘certify’ the emissions reductions or offsets.Often times the scheme or agreement under which the activity is taking place will designate  who is entitled to carry out these procedures. In the case of transactions under regulatory schemes, these and many other issues will be decided upon by the rules of the scheme itself. For more information on the precise legal and regulatory issues associated with projects under the Kyoto Protocol’s Clean Development Mechanism.

Examples of Key Regulatory Markets

The Kyoto Protocol allows for several ‘market based mechanisms’ to assist developed countries

(Annex I parties) to meet their emissions reduction targets. ‘Joint Implementation’ allows a developed country to fund and/or run a project to reduce emissions in another developed country. The funding country can then apply the emissions reductions generated to help it to meet its own Kyoto target. Through the ‘Clean Development Mechanism’ (or ‘CDM’), developed countries may finance emissions reducing projects in developing countries that are party to the Kyoto Protocol then use the resulting ‘certified emissions reductions’ (‘CERs’) to offset their own emissions. This mechanism is design to support the sustainable development objectives of developing countries and to provide for the transfer of technology to, and capacity building in, developing countries. It is a very big part of the carbon market, being worth 12 billion Euros in 2007 - an increase in 200% from 2006 and comprising 29% (in financial terms) of the overall market. In reality, views are mixed about whether the CDM has really helped to further sustainable development and technology transfer in developing countries in a substantive way. Many Indigenous communities in particular are concerned about the potentially negative impacts of CDM related activities on their lands and livelihoods.This applies largely to Indigenous communities in developing countries not developed countries - as all CDM projects are hosted in developing countries. Types of CDM projects include: renewable energy, fuel switching (from oil, gas or diesel to gas or biofuels), projects to capture greenhouse gases released from landfill sites; energy efficiency projects; activities to reduce methane from agricultural processes and forestry-related projects, among others. The Kyoto Protocol is also flexible in that developed countries may decide how to reduce their emissions at a domestic level. In this context, a range of emissions trading schemes and other market-based mechanisms have emerged. Examples include the European Union Emissions Trading Scheme, the Swiss Emissions Trading Scheme, the New Zealand Emissions Trading Scheme and another scheme running in several North Eastern states of the United States. The US federal government, the state of California, Japan, Canada and Australia among others, are also now in the process of (separately) considering the establishment of such schemes.

The features of each of these schemes are different. In most (but not all) cases, the government places a ‘cap’ on the amount of greenhouse gases that certain factories or companies can emit over a period of several years. These companies are usually from sectors of the economy that emit a lot of greenhouse gases - like heavy industry and power generation. If a company is going to emit more emissions than its cap, it can buy extra credits from another company that has managed to beat its cap (by reducing its emissions below its cap). Another way that companies can comply is to pay to offset their excess emissions through emissions reductions activities undertaken by others. This is where Indigenous communities may most likely play

a role - through providing offsets, particularly through land management or forestry-related activities. The government entity administering the scheme will decide which activities can qualify as potential offsetting activities. Indigenous communities may often also be able to undertake similar activities through the voluntary market.

Carbon Financing Opportunities

Another key aspect of the overall development of efforts to reduce greenhouse gas emissions has been the emergence of a range of opportunities for indirect or third-party financing of emissions reduction activities. This is sometimes referred to as ‘carbon financing’. In fact, it may also include other fiscal incentives, such as tax rebates or exemptions for the installation of emissions reducing equipment, such as solar water panels. International organisations like the World Bank, the Asian Development Bank and the United Nations Development Programme, among others have established a range of funds and programmes to facilitate the creation of emissions reducing activities. These programmes generally focus on emissions reducing activities in developing countries, such that little of this international finance is currently available to Indigenous peoples in developed countries. However, financing opportunities may well exist for Indigenous communities in developed countries, through domestic grant programmes. The reduction of emissions might be just one aspect of a project designed to ensure sustainable land management, ecosystem protection, improved community health, the creation of employment or training opportunities, sustainable livestock management, or the development of a more stable community power supply, for example. When carrying out wider projects like these, it might often be worth considering whether they might have an emissions reducing component and whether that might assist with the attraction of finance.

 Impacts of Carbon Mitigation Activities on Indigenous People

Reports are mixed as to whether climate change mitigation activities are having a positive impact

on the lives and lands of Indigenous peoples. Research suggests that problems can arise when

Indigenous people are not properly consulted, nor their interests taken into account, in the development of carbon mitigation activities. There have been claims of some Indigenous people being evicted from lands to allow for the planting of trees or biofuel crops, or for the development of hydropower schemes, for example. Other commentators note that the growing demand for biofuel crops (for transporation fuel) may reduce the production of food crops and raise food prices. If instituted appropriately, climate change mitigation activities can facilitate the availability and reliability of energy, sound water resource management, a reduction in air pollution and the conservation of ecosystems, plants, animals and land of importance to Indigenous people.

Climate change mitigation activities may encourage a return to country, provide local employment or even encourage the maintenance of traditional practices, such as customary land management activities. Additionally, it is important to bear in mind that Indigenous people themselves can contribute a great deal to mitigating and adapting to climate change, given their experiences of responding to natural climatic change over millennia and given their ownership of considerable tracts of forested and wild land.