A Market Like No Other

Abstract

History may well judge the Bank’s role in subsidizing global carbon markets as an ill-advised and quixotic foray into the early-twenty-first-century equivalent of the seventeenth-century speculative bubble in tulip-bulb futures. Here the seductive lure was not to purchase a whole house in Amsterdam for the price of a single rare tulip bulb (as was the case at the peak of the infamous Dutch financial bubble in tulip futures), but to unleash a global carbon market whereby businesses in developed countries would pay tens of billions of dollars a year for activities in poorer countries to offset rich-country greenhouse-gas (GHG) emissions. Superficially, it seemed plausible enough; after all, major industrialized country governments were pushing the scheme, and they gave the Bank still more money to help catalyze it.