On Wed, 15 Aug 2012 19:29:12 +0100, Jon Heuch wrote:
One can establish a value without having a market, although how you do so
can be a matter
I guess you meant cannot?
You guessed wrong! The presumption of the commentary that we are referring
to is that the ONLY
way to establish a value is either to use existing markets or to set up new
markets. The trouble is
that markets are likely to have transaction costs which may be significant.
Take for example some
carbon projects establishing trees in the tropics. The market makers (i.e.
the banks and their
offshoots) may take 30%+ of the value of any transaction; in addition that
rate is only applicable
as long as the transaction is sufficiently large. There is simply no market
for small projects - the
minimum transaction cost is simply too large.
So for example a market for established urban trees is unlikely to develop;
it might be possible for
a town, city or region to generate cash from some aspects of their trees, but
this is in part due to
the scale possible. At an individual property level it is most unlikely. So
does that mean we just
value things at "0"?
One can set up proxy values and that is precisely what Helliwell, CAVAT, CTLA
and I Tree do, to a
lesser or greater extent. There may be market elements within them, but they
are proxies based on a
variety of assumptions.
Anyway the missing point it the accounting for cost to everyone else
of not accounting for the cost of any action whose consequence is
borne globally, e.g. using the atmosphere as a free dump
AJH feeling guilty about burning some pallets today surreptitiously
as the economists would phrase it, the externalities of a market can lead
to market "failure" -
where market prices do not lead to a desirable outcome, or lead to an
Jon Heuch Tel: +44 (0)1233 713 466 Mob: +44 (0)7810 610 712
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