Environmental Sustainability and Finance

Authors: Janelle Knox-Hayes*, MIT
Topics: Economic Geography, Environment, Human-Environment Geography
Keywords: Sustainability, Environment, Finance
Session Type: Paper
Day: 4/4/2019
Start / End Time: 5:00 PM / 6:40 PM
Room: 8222, Park Tower Suites, Marriott, Lobby Level
Presentation File: No File Uploaded


A series of new markets have developed over the last few decades to price environmental goods and services. These markets value and trade positive and negative externalities, costs and benefits of economic activities that are not accounted in economic transactions, such as carbon dioxide emissions, forestry extent, water purity and biodiversity quality. This article offers an analysis of environmental finance, the use of the pricing of externalities to try to generate sustainable finance that returns value to nature. Consideration of the spatial and temporal dynamics of value highlights the ways in which externalities are an extension of use value in time. As the exchange potential of ecosystem services expands, the function of these services is subject to increasing spatial and temporal acceleration and displacement. The pricing of externalities alone does not guarantee the material changes in resource and energy use now and in the future that are required to combat problems such as climate change. I examine different mechanisms of creating sustainable value through finance and propose several new mechanisms that could better generate sustainable environmental finance by capturing the use potential of natural resources across time. These approaches seek to entrain the temporal production of instruments of exchange to their sources of production and to create property rights to manage natural resources as service stocks rather than commodities. Sustainable environmental finance requires a new perspective of the value resources hold as well as how value is managed over time.

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